[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Rules and Regulations]
[Pages 72158-72310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24591]
[[Page 72157]]
Vol. 85
Thursday,
No. 219
November 12, 2020
Part IV
Department of the Treasury
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Internal Revenue Service
Department of Labor
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Employee Benefits Security Administration
Department of Health and Human Services
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26 CFR Part 54
29 CFR Part 2590
45 CFR Parts 147 and 158
Transparency in Coverage; Final Rule
Federal Register / Vol. 85 , No. 219 / Thursday, November 12, 2020 /
Rules and Regulations
[[Page 72158]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9929]
RIN 1545-BP47
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AB93
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 147 and 158
[CMS-9915-F]
RIN 0938-AU04
Transparency in Coverage
AGENCY: Internal Revenue Service, Department of the Treasury; Employee
Benefits Security Administration, Department of Labor; Centers for
Medicare & Medicaid Services, Department of Health and Human Services.
ACTION: Final rule.
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SUMMARY: The final rules set forth requirements for group health plans
and health insurance issuers in the individual and group markets to
disclose cost-sharing information upon request to a participant,
beneficiary, or enrollee (or his or her authorized representative),
including an estimate of the individual's cost-sharing liability for
covered items or services furnished by a particular provider. Under the
final rules, plans and issuers are required to make this information
available on an internet website and, if requested, in paper form,
thereby allowing a participant, beneficiary, or enrollee (or his or her
authorized representative) to obtain an estimate and understanding of
the individual's out-of-pocket expenses and effectively shop for items
and services. The final rules also require plans and issuers to
disclose in-network provider negotiated rates, historical out-of-
network allowed amounts, and drug pricing information through three
machine-readable files posted on an internet website, thereby allowing
the public to have access to health coverage information that can be
used to understand health care pricing and potentially dampen the rise
in health care spending. The Department of Health and Human Services
(HHS) also finalizes amendments to its medical loss ratio (MLR) program
rules to allow issuers offering group or individual health insurance
coverage to receive credit in their MLR calculations for savings they
share with enrollees that result from the enrollees shopping for, and
receiving care from, lower-cost, higher-value providers.
DATES:
Effective date: The final rules are effective on January 11, 2021.
Applicability date: See the SUPPLEMENTARY INFORMATION section for
information on the applicability dates.
FOR FURTHER INFORMATION CONTACT: Deborah Bryant, Centers for Medicare &
Medicaid Services, (301) 492-4293. Christopher Dellana, Internal
Revenue Service, (202) 317-5500. Matthew Litton or Frank Kolb, Employee
Benefits Security Administration, (202) 693-8335.
Customer Service Information: Individuals interested in obtaining
information from the Department of Labor (DOL) concerning employment-
based health coverage laws may call the Employee Benefits Security
Administration (EBSA) Toll-Free Hotline at 1-866-444-EBSA (3272) or
visit DOL's website (http://www.dol.gov/ebsa). In addition, information
from HHS on private health insurance for consumers can be found on the
Centers for Medicare & Medicaid Services (CMS) website (www.cms.gov/cciio) and information on health reform can be found at http://www.healthcare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The final rules require group health plans and health insurance
issuers in the individual and group markets to disclose cost-sharing
information upon request, to a participant, beneficiary, or enrollee,
which, unless otherwise indicated, for the purpose of the final rules
includes an authorized representative, and require plans and issuers to
disclose in-network provider rates, historical out-of-network allowed
amounts and the associated billed charges, and negotiated rates for
prescription drugs in 26 CFR part 54, 29 CFR part 2590, and 45 CFR part
147. HHS also finalizes amendments to its MLR program rules in 45 CFR
part 158.
A. Statutory Background and Enactment of PPACA
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010, and the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30,
2010 (collectively, PPACA). As relevant here, PPACA reorganized,
amended, and added to the provisions of part A of title XXVII of the
Public Health Service (PHS) Act relating to health coverage
requirements for group health plans and health insurance issuers in the
group and individual markets. The term group health plan includes both
insured and self-insured group health plans.
PPACA also added section 715 to the Employee Retirement Income
Security Act of 1974 (ERISA) and section 9815 to the Internal Revenue
Code (Code) to incorporate the provisions of part A of title XXVII of
the PHS Act, PHS Act sections 2701 through 2728, into ERISA and the
Code, making them applicable to group health plans, and health
insurance issuers providing coverage in connection with group health
plans.
1. Transparency in Coverage
Section 2715A of the PHS Act provides that group health plans and
health insurance issuers offering group or individual health insurance
coverage must comply with section 1311(e)(3) of PPACA, which addresses
transparency in health coverage and imposes certain reporting and
disclosure requirements for health plans that are seeking certification
as qualified health plans (QHPs) that may be offered on an Exchange. A
plan or coverage that is not offered through an Exchange (as defined by
section 1311(b)(1) of PPACA) is required to submit the information
required to the Secretary of HHS and the relevant state's insurance
commissioner, and to make that information available to the public.
Paragraph (A) of section 1311(e)(3) of PPACA requires a plan
seeking certification as a QHP to make the following information
available to the public and submit it to state insurance regulators,
the Secretary of HHS, and the Exchange:
Claims payment policies and practices,
periodic financial disclosures,
data on enrollment,
data on disenrollment,
data on the number of claims that are denied,
data on rating practices,
information on cost-sharing and payments with respect to any
out-of-network coverage, and
information on enrollee and participant rights under Title I
of PPACA.
Paragraph (A) also requires a plan seeking certification as a QHP to
submit any ``[o]ther information as determined appropriate by the
Secretary.''
[[Page 72159]]
Paragraph (C) of section 1311(e)(3) of PPACA requires plans, as a
requirement of certification as a QHP, to permit individuals to learn
the amount of cost sharing (including deductibles, copayments, and
coinsurance) under the individual's coverage that the individual would
be responsible for paying with respect to the furnishing of a specific
item or service by an in-network provider in a timely manner upon the
request of the individual. Paragraph (C) specifies that, at a minimum,
such information must be made available to the individual through an
internet website and through other means for individuals without access
to the internet.
Together these statutory provisions require the overriding majority
of private health plans \1\ to disseminate a substantial amount of
information to provide transparency in coverage. The portions of the
final rules that require plans and issuers to disclose cost-sharing
information upon request, to a participant, beneficiary, or enrollee
implement paragraph (C) of section 1311(e)(3) of PPACA. The portions of
the final rules that require plans and issuers to disclose in-network
provider rates, historical out-of-network allowed amounts and the
associated billed charges, and negotiated rates for prescription drugs
implement paragraph (A) of section 1311(e)(3) of PPACA. The
requirements to disclose out-of-network allowed amounts specifically
implements the requirement in section 1311(e)(3)(A)(vii) to provide
information on ``payments with respect to any out-of-network
coverage.'' In addition to payment information on out-of-network
charges, the Secretary of HHS determined that payment information on
in-network rates and prescription drugs is also appropriate information
to require plans and issuers to disclose to provide transparency in
coverage under section 1311(e)(3)(A)(ix).
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\1\ As of 2018, private, non-grandfathered health plans that
must comply with these statutory provisions covered more than 92
percent of the almost 177 million people covered by private health
coverage. The remaining 7.7 percent were covered by grandfathered
health plans or were enrolled in short-term limited duration
coverage or health care sharing ministries. See Kaiser Family
Foundation, Health Insurance Coverage of the Total Population in
2018, https://www.kff.org/other/state-indicator/total-population/?dataView=1¤tTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D, last accessed October 5, 2020.
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PPACA's transparency in coverage requirements were enacted in
coordination with a set of requirements that transformed the regulation
of private market health plans and issuers. These requirements for the
first time apply a comprehensive framework for regulating private
health coverage through Federal law.\2\ Prior to PPACA, Federal law
relied on states to be the primary regulators of health insurance, but
applied only a limited set of Federal requirements to govern private
health coverage. Where Federal law regulated private health coverage,
there was a substantial variation in how these regulations applied,
depending on whether private health coverage was self-insured group
coverage, large group insurance coverage, small group insurance
coverage, or individual insurance coverage. To establish a
comprehensive framework for regulating private health coverage, PPACA
first set out a series of requirements on ``Improving Coverage'' that
generally apply to group health plans and health insurance issuers
offering group or individual health insurance coverage.\3\ These
requirements ranged from the prohibition on lifetime or annual dollar
limits in section 2711 of the PHS Act to the requirement to cover out-
of-network emergency services in section 2719A of the PHS Act and
include the transparency in coverage requirements in section 2715A of
the PHS Act.\4\ By including transparency in coverage in this set of
requirements that apply to most private coverage, Congress established
transparency as a key component to PPACA's comprehensive framework for
regulating private health coverage.\5\
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\2\ See Jost, T.S. ``Loopholes in the Affordable Care Act:
Regulatory gaps and border crossing techniques and how to address
them.'' St. Louis University Journal of Health Law and Policy,
Washington & Lee Legal Studies Paper No. 2011-16. August 15, 2011
(explaining that ``[t]he Affordable Care Act was meant to regulate
health care plans comprehensively'' and providing further details on
the scope of PPACA). Available at: https://scholarlycommons.law.wlu.edu/wlufac/265/.
\3\ Patient Protection and Affordable Care Act, Public Law 111-
148, 124 Stat. 119 (2010), section 1001.
\4\ In addition to these requirements, PPACA's ``Improving
Coverage'' requirements include, among other things: The prohibition
on rescissions in section 2712 of the PHS Act; the requirement to
cover preventive health services without cost sharing requirements
in section 2713 of the PHS Act; the extension of coverage to
dependents up to age 26 in section 2714 of the PHS Act; the
requirement to provide a summary of benefits and coverage in section
2715 of the PHS Act; quality reporting requirements in section 2717
of the PHS Act; and appeals process requirements in section in 2719
of the PHS Act.
\5\ Transparency was included as an important and transformative
element in other leading comprehensive health reform proposals. See
Porter, M. and Teisberg, E. Redefining Health Care. Harvard Business
School Press. Boston, MA. 2006. (``Perhaps the most fundamental role
of government in enabling value-based competition is to ensure that
universal, high-quality information on provider outcomes and prices
for every medical condition is collected and disseminated. This
single step will have far-reaching and pervasive effects throughout
the system . . . .'').
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On March 27, 2012, HHS issued the Exchange Establishment final rule
that implemented sections 1311(e)(3)(A) through (C) of PPACA at 45 CFR
155.1040(a) through (c) and 156.220.\6\ The Exchange Establishment
final rule created standards for QHP issuers to submit specific
information related to transparency in coverage. QHPs are required to
post and make data related to transparency in coverage available to the
public in plain language and submit this same data to HHS, the
Exchange, and the relevant state insurance commissioner. In the
preamble to the Exchange Establishment final rule, HHS noted that
``health plan standards set forth under the final rules are, for the
most part, strictly related to QHPs certified to be offered through the
Exchange and not the entire individual and small group market. Such
policies for the entire individual and small and large group markets
have been, and will continue to be, addressed in separate rulemaking
issued by HHS, and the Departments of Labor and the Treasury.''
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\6\ 77 FR 18310 (Mar. 27, 2012).
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2. Medical Loss Ratio
Section 2718(a) of the PHS Act, as added by PPACA, generally
requires health insurance issuers offering group or individual health
insurance coverage (including a grandfathered health insurance plan) to
submit an annual report to the Secretary of HHS that details the
percentage of premium revenue (after certain adjustments) expended on
reimbursement for clinical services provided to enrollees under health
coverage and on activities that improve health care quality. The
proportion of premium revenue spent on clinical services and quality
improvement activities is called the MLR. Section 2718(b) of the PHS
Act requires an issuer to provide annual rebates to enrollees if its
MLR falls below specified standards (generally 80 percent for the
individual and small group markets, and 85 percent for the large group
market). HHS published an interim final rule to implement the MLR
program in the December 1, 2010 Federal Register (75 FR 74863). A final
rule was published in the December 7, 2011 Federal Register (76 FR
76573). The MLR program requirements were amended in final rules
published in the December 7, 2011 Federal Register (76 FR 76595), the
May 16, 2012 Federal Register (77 FR 28790), the March 11, 2014 Federal
Register (79 FR 13743),
[[Page 72160]]
the May 27, 2014 Federal Register (79 FR 30339), the February 27, 2015
Federal Register (80 FR 10749), the March 8, 2016 Federal Register (81
FR 12203), the December 22, 2016 Federal Register (81 FR 94183), the
April 17, 2018 Federal Register (83 FR 16930), the April 25, 2019
Federal Register (84 FR 17454), and the February 6, 2020 Federal
Register (85 FR 7088).
B. Benefits of Transparency in Health Coverage and Past Efforts To
Promote Transparency
PPACA's transparency in coverage requirements can help ensure the
accurate and timely disclosure of information appropriate to support an
efficient and competitive health care market. A well-functioning,
competitive market depends on information being available to buyers and
sellers.\7\ As President Trump's ``Executive Order on Improving Price
and Quality Transparency in American Healthcare to Put Patients First''
explains: ``To make fully informed decisions about their health care,
patients must know the price and quality of a good or service in
advance.'' Yet, as the Executive order then notes, ``patients often
lack both access to useful price and quality information and the
incentives to find low-cost, high-quality care.'' The lack of this
information is widely understood to be one of the root problems causing
dysfunction within America's health care system.
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\7\ Porter, M. and Teisberg, E. Redefining Health Care. Harvard
Business School Press. Boston, MA. 2006, pg. 54. (``Information is
fundamental to competition in any well-functioning market. It
enables buyers to shop for the best value and allows sellers to
compare themselves to rivals. Without relevant information, doctors
cannot compare their results to best practice and to other
providers. And without appropriate information, patient choice has
little meaning.'').
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The Departments of Labor, HHS, and the Treasury (Departments) are
of the view that transparency in health coverage requirements will
strengthen America's health care system by giving health care
consumers, researchers, regulators, lawmakers, health innovators, and
other health care stakeholders the information they need to make, or
assist others in making informed decisions about health care purchases.
Health care consumers include various persons and entities that finance
health care needs through the purchase of insurance. Health care
consumers also include uninsured persons without health coverage who
must pay out-of-pocket for health care items and services and uninsured
persons who may be shopping for health coverage. Employers that sponsor
health plans for their employees and government programs that provide
health care services and benefits to consumers are also health care
consumers.
By requiring the dissemination of price and benefit information
directly to consumers and to the public, the transparency in coverage
requirements will provide the following consumer benefits:
Enables consumers to evaluate health care options and to make
cost-conscious decisions;
strengthens the support consumers receive from stakeholders
that help protect and engage consumers;
reduces potential surprises in relation to individual
consumers' out-of-pocket costs for health care services;
creates a competitive dynamic that may narrow price dispersion
for the same items and services in the same health care markets; and
puts downward pressure on prices which, in turn, potentially
lowers overall health care costs.
The goal of the final rules is to deliver these benefits to all
consumers and health care stakeholders through greater transparency in
coverage.
Comments received in response to the proposed rules on transparency
in coverage (discussed in more detail later in this preamble) have
strengthened the Departments' view that this price transparency effort
will equip the public with information to actively and effectively
participate in the health care system as consumers.\8\ The majority of
commenters acknowledged the importance of the availability of health
care pricing information and appropriate tools to assist consumers in
health care decision-making and managing health care costs. For these
reasons and those explained in more detail below in this preamble, the
Departments continue to be of the view that price transparency efforts
are crucial to providing consumers (individual and institutional) with
meaningful and actionable pricing information in an effort to contain
the growth of health care costs.
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\8\ 84 FR 65464 (Nov. 27, 2019).
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1. Transparency Provides Necessary Information for Consumers To Make
More Informed Health Care Spending Decisions
As explained in the report, ``Reforming America's Healthcare System
Through Choice and Competition,'' consumers have an important role to
play in controlling costs, but consumers must have meaningful
information in order to create the market forces necessary to achieve
lower health care costs.\9\ When consumers seek care, they do not
typically know whether they could have received the same service from
another provider at lower prices. Third-party payers negotiate prices
on the consumer's behalf and reimburse costs directly to health care
providers, concealing the actual price from the consumer at the point
of care. After receiving care, consumers typically receive an
Explanation of Benefits (EOB), which details the price charged by the
provider, contracted or negotiated rate, and consumer cost sharing.
Often, only after services are rendered is the cost of care disclosed
to the consumer.
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\9\ Azar, A.M., Mnuchin, S.T., and Acosta, A. ``Reforming
America's Healthcare System Through Choice and Competition.'' United
States, Department of Health and Human Services. December 3, 2018.
Available at: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
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Historically, there has been little to no incentive for some
consumers to consider price and seek lower-cost care.\10\ Rapidly
rising health care spending in the past 20 years, however, has led to
consumers shouldering a greater portion of their health care costs
through increases in out-of-pocket expenses.\11\
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\10\ Id.
\11\ Claxton, G., Levitt, L., Long M. ``Payments for cost
sharing increasing rapidly over time.'' Peterson-Kaiser Health
System Tracker. April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/.
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Since 1970, per capita out-of-pocket expenditures have nearly
doubled due to a number of factors.\12\ These factors include increased
enrollment in high deductible health plans (HDHPs) and accompanying
health savings accounts (HSAs), and increased plan and issuer reliance
on payments towards deductibles comprising the proportion of total
cost-sharing payments.\13\ As explained in the preamble to the proposed
rules, these shifts in plan design and enrollment are correlated with
consumers bearing a greater share of their overall health care costs in
the private health insurance market than in previous years.\14\ From
2002 to the enactment of PPACA in 2010,
[[Page 72161]]
nationally, the percentage of private sector employees enrolled in a
health plan with a deductible increased from 47.6 percent to 77.5
percent and continued to increase to 86.6 percent in 2019.\15\ Average
family deductibles for private sector employees grew from $958 in 2002
to $1,975 in 2010, and then to $3,655 in 2019--an 85 percent increase
since the enactment of PPACA.\16\ These changes represent a substantial
increase in the amount that consumers must pay for health care before
insurance begins to cover items or services.\17\ Deductibles made up 52
percent of cost-sharing spending in 2016, up from 30 percent in 2006,
while copays dropped from 43 percent to 17 percent of cost-sharing
payments over the same period.\18\ The gradual shift away from
copayments, which are predictable to the consumer through their set
dollar amounts for each covered item or service, to deductibles and
coinsurance, has increased the need for consumers to know the
negotiated price in order to plan ahead and budget for out-of-pocket
costs. Over time, price disclosure can improve consumers' ability to
better manage costs of utilized health care for a variety of health
care plans. Increased enrollment in HDHPs and the shift to coinsurance
across plan and benefit designs means that consumers have a vested
interest in learning the costs of care prior to paying for items or
services, as they are responsible for paying out-of-pocket
expenditures, which are directly dependent on the negotiated or
contractual price.
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\12\ ``Out-of-pocket spending.'' Peterson-KFF Health System
Tracker. May 2020. Available at: https://www.healthsystemtracker.org/indicator/access-affordability/out-of-pocket-spending/.
\13\ HDHP as defined in section 223(c)(2) of the Code; see also
Claxton, G., Levitt, L., Long, M. ``Payments for cost sharing
increasing rapidly over time.'' Peterson-KFF Health System Tracker.
April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/.
\14\ 84 FR 65464, 65465 (Nov. 27, 2019).
\15\ See ``Medical Expenditure Panel Survey. Insurance Component
National-Level Summary Tables.'' United States Department for Health
and Human Services Agency for Healthcare Research and Quality.
Available at: https://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=1.
\16\ Id.
\17\ McCarthy-Alfano, M., et al. ``Measuring the burden of
health care costs for working families.'' Health Affairs. April 2,
2019. Available at: https://www.healthaffairs.org/do/10.1377/hblog20190327.999531/full/.
\18\ Claxton, G. et al. ``Increases in cost-sharing payments
continue to outpace wage growth.'' Peterson-KFF Health System
Tracker. June 15, 2018. Available at: https://www.healthsystemtracker.org/brief/increases-in-cost-sharing-payments-have-far-outpaced-wage-growth/.
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These trends in designing health plans have led to consumers
bearing an increased share of their health care costs. The fact that
more consumers are bearing greater financial responsibility for the
cost of their health care provides an opportunity to establish a more
consumer-directed and consumer-driven health care market. Eighty-eight
percent of consumers support requirements for providers and issuers to
disclose prices prior to care.\19\ If consumers have better pricing
information and can shop for health care items and services more
efficiently, they can increase competition and demand for lower
prices.\20\ However, consumers generally have little information
regarding negotiated rates or out-of-network costs until after services
are rendered. There is also wide variability in health care prices for
the same service.\21\ As a result, it can be difficult for consumers to
estimate potential out-of-pocket costs.
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\19\ ``Harvard CAPS Harris Poll.'' Harvard University. May 2019.
Available at: https://harvardharrispoll.com/wp-content/uploads/2019/06/HHP_May19_vF.pdf?utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz--NgSdTYggGUP4tWyR2IEQ7i8TCg1s3DcHuQyhErIgkX3KFUi3SFgl9OZKm4-JUOOi9tmMQ.
\20\ Azar, A.M., Mnuchin, S.T., and Acosta, A. ``Reforming
America's Healthcare System Through Choice and Competition.'' United
States, Department of Health and Human Services. December 3, 2018.
Available at: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
\21\ Cooper, Z., et al. ``The Price Ain't Right? Hospital Prices
and Health Spending on the Privately Insured.'' The Quarterly
Journal of Economics, Vol. 134. Issue 1. February 2019. September 4,
2018. Available at: https://academic.oup.com/qje/article/134/1/51/5090426?searchresult=1.
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2. Transparency Strengthens Stakeholders' Ability To Support Consumers
Making price transparency information publicly available
strengthens the work of other health care stakeholders that help
provide care or promote access to care to consumers, or otherwise aim
to protect consumers and their interests in the health care system.
These entities include researchers, regulators, lawmakers, patient and
consumer advocates, and businesses that provide consumer support tools
and services. A key aspect of transparency in coverage is to make
health care pricing information more accessible and useful to consumers
by making the information available to persons and entities with the
requisite experience and expertise to assist individual consumers and
other health care purchasers to make informed health care decisions.
With information on pricing, these other health care stakeholders
can better fulfill each of the unique roles they play to improve
America's health care system for consumers. For instance, with pricing
information researchers could better assess the cost-effectiveness of
various treatments; state regulators could better review issuers'
proposed rate increases; patient advocates could better help guide
patients through care plans; employers could adopt incentives for
consumers to choose more cost-effective care; and entrepreneurs could
develop tools that help doctors better engage with patients.
3. Transparency Reduces the Potential for Surprise Billing
Making the price of care available to consumers before they receive
care can reduce the potential for consumers to be surprised by the
price of a health care item or service when they receive the bill after
receiving care. However, accessible pricing information holds special
value for insured consumers.\22\ Surprise billing has become a
substantial concern for insured consumers, in particular, consumers who
receive a bill from an out-of-network provider when they thought an in-
network provider was treating them. While price transparency alone is
not a complete solution to this problem, the disclosure of pricing
directly to consumers could help mitigate some unexpected health care
costs. As just noted, making pricing information public can also
strengthen other health care stakeholders' ability to protect
consumers. In the case of surprise billing, public information on
pricing for in-network and out-of-network services could allow
stakeholders to develop better tools to help patients avoid surprises
and improve oversight of health insurance issuers, plans, and
providers.
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\22\ See Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. Secretary of
Health and Human Services' Report on: Addressing Surprise Medical
Billing, at p. 3. July 2020. (recognizing that HHS regulatory action
to encourage price transparency by insurers ``can serve as the
backbone for a more comprehensive surprise billing solution'').
Available at https://aspe.hhs.gov/system/files/pdf/263871/Surprise-Medical-Billing.pdf.
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4. Transparency Increases Competition and Contains Costs
Without transparency in pricing, market forces cannot drive
competition. This lack of competition in many health care markets is
demonstrated by significant, unexplained variations in prices for
procedures, even within a single region.\23\ For example, studies of
price variation within California and nationally suggest that there is
substantial opportunity for increased transparency to save money by
shifting patients from high to lower-cost providers.\24\ The
Departments are of the
[[Page 72162]]
view that consumers will take advantage of increased transparency to
shop for their health care if price transparency is put into place
nationwide.\25\ Many empirical studies have investigated the impact of
price transparency on non-health care markets, with most research
showing that ``price transparency leads to lower and more uniform
prices, a view consistent with predictions of standard economic
theory.'' \26\ Studies suggest that consumers want and will use
actionable pricing information to shop for more cost-effective
care.\27\ For example, when automobile prices were presented
transparently on the internet, inclusive of the dealer invoice price,
the consumers who did not like the traditional bargaining process were
able to reduce spending overall by 1.5 percent.\28\ Another study
demonstrated the public display of life insurance prices for comparison
led to a 5 percent decrease in the consumer price.\29\ Price
transparency also reduced price dispersion across other markets, such
as the airline industry, which saw a reduction in price dispersion from
18 percent in 1997 narrowing to 0.3-2.2 percent in 2002 for fares
available at multiple travel websites.\30\ These lessons from other
markets suggest that more thoroughly implementing price transparency
across the health care industry could increase competition to provide
lower costs and limit price variation.\31\
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\23\ Id.
\24\ Boynton, A., Robinson, J. ``Appropriate Use of Reference
Pricing Can Increase Value.'' Health Affairs Blog. July 7, 2015.
Available at: https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/; see also Sinaiko, A., Rosenthal, M.
``Examining a Health Care Price Transparency Tool: Who Uses it, and
How They Shop for Care.'' 35 Health Affairs 662. April 2016.
Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2015.0746.
\25\ See Gordon, D., et al. ``Health Care Consumer Shopping
Behaviors and Sentiment: Qualitative Study.'' Journal of
Participatory Medicine. Volume 12. No. 2. 2020. Available at:
https://jopm.jmir.org/2020/2/e13924/ (study demonstrating that
consumers already engage in ``behaviors related to seeking,
comparing, or knowing the prices of care'' regardless of the
presence of price transparency tools).
\26\ Austin, D.A., and Gravelle, J.G. ``Does Price Transparency
Improve Market Efficiency? Implications of Empirical Evidence in
Other Markets for the Health Sector.'' United States Congress
Congressional Research Service. April 29, 2008. Available at:
https://crsreports.congress.gov/product/pdf/RL/RL34101; see also
Grennan, M., Swanson, A. ``Transparency and Negotiated Prices: The
Value of Information in Hospital-Supplier Bargaining.'' 128 Journal
of Political Economy. April 2020 (Citing research in consumer goods
showing that information can help decision making when buyers have
imperfect information on costs.). Available at: https://www.nber.org/papers/w22039; see also 84 FR 65464, 65466 (Nov. 27,
2019).
\27\ Semigran, H.L., et al. ``Patients' Views on Price Shopping
and Price Transparency.'' The American Journal of Managed Care. June
26, 2017. Available at: https://www.ajmc.com/view/patients-views-on-price-shopping-and-price-transparency.
\28\ Zettlemeyer, F., Morton, F.S., and Silva-Risso, J. ``How
the internet Lowers Prices: Evidence from Matched Survey and
Automobile Transaction Data.'' Journal of Marketing Research. May
2006. Available at: https://doi.org/10.1509%2Fjmkr.43.2.168.
\29\ Brown, J., and Goolsbee, A. ``Does the internet Make
Markets More Competitive? Evidence from the Life Insurance
Industry.'' Journal of Political Economy, vol. 110, June 2002, pp.
481-507.
\30\ Clemons, E.K., Hann, I., and Hitt, L. ``Price Dispersion
and Differentiation in Online Travel: An Empirical Investigation,''
Management Science, vol. 48, no. 4, 2001, pp. 521-39; see also
``Occupational Labor Statistics.'' United States Bureau of Labor
Statistics. Available at: https://www.bls.gov/oes/current/oes_stru.htm.
\31\ 84 FR 65464, 65466 (Nov. 27, 2019).
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Despite the general absence of price transparency in the health
care sector, there is research showing how price transparency leads to
lower and more uniform pricing in health care markets. For instance, as
noted in the preamble to the proposed rule, research shows patients
saved $7.9 million and issuers saved $36 million on imaging services in
New Hampshire after the state launched a website publishing health
prices for most consumers with private health insurance.\32\ One study
found use of a telephone- and email-based tool to search for health
care prices reduced the price paid by 10 to 17 percent and reduced the
prices paid for care on average by 1.6 percent.\33\ Another study of a
program that provided health plan participants, beneficiaries, or
enrollees with price and quality information to help select high-value
imaging services found an increase in the use of lower-cost
facilities.\34\ This consumer behavior prompted higher-cost facilities
to lower their prices, which resulted in a 30 percent reduction in the
price variation between low- and high-cost facilities.\35\ These
studies, as well the numerous studies highlighted in subsequent
sections of this rule, offer substantial evidence that price
transparency in health care markets will result in consumer benefits
similar to those that result from transparency in other markets.
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\32\ Id.
\33\ Lieber, E. ``Does It Pay to Know Prices in Health Care?''
American Economic Journal: Economic Policy. February 2017. Available
at https://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.20150124.
\34\ Wu, S.J. et al. ``Price transparency for MRIs increased use
of less costly providers and triggered provider competition.''
Health Affairs. August 2014. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0168.
\35\ Id.
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5. The Final Rules Will Fill Gaps Left by State and Private
Transparency Efforts
Currently, the information that consumers need to make informed
decisions based on the prices of health care services is not readily
available or is presented in a manner that makes it challenging to
understand. As noted in the preamble to the proposed rules, the 2011
Government Accountability Office (GAO) report, ``Health Care Price
Transparency: Meaningful Price Information is Difficult for Consumers
to Obtain Prior to Receiving Care,'' found that the lack of
transparency in health care prices, coupled with the wide pricing
disparities for particular procedures within the same market, can make
it difficult for consumers to understand health care prices and to shop
effectively based on cost.\36\ The report also explored various price
transparency initiatives, including tools that consumers could use to
generate price estimates before receiving a health care service. The
report notes that pricing information displayed by tools varies across
initiatives, in large part due to limits reported by the initiatives in
their access or authority to collect certain necessary price data. In
particular, the report notes the lack of public disclosure of rates
negotiated between providers and third-party payers. The GAO report,
therefore, recommended that HHS determine the feasibility of, and the
next steps for, making estimates of out-of-pocket costs for health care
services available to consumers.
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\36\ 84 FR 65464, 65466-65467 (Nov. 27, 2019); see also GAO-11-
791 at p. 28 (Sep. 2011).
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States have been at the forefront of transparency initiatives and
have adopted a variety of approaches to improve price transparency.\37\
More than half of the states have passed legislation establishing price
transparency websites or mandating that health plans, hospitals, or
physicians make pricing information available to patients.\38\ For
example, as of September 2020, thirty one states have enacted laws that
provide participants, beneficiaries, and enrollees with at least
partial protection against the practice of ``balance billing.'' \39\ At
least eighteen states have All-Payer Claims Databases. However, state
transparency requirements are generally not applicable to self-insured
group health plans, which cover approximately 58.7
[[Page 72163]]
percent of private-sector workers.\40\ As a result, the data collected
under state law does not include data from self-insured plans, and a
significant portion of consumers may not have access to information on
their plans.
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\37\ De Brantes, F., et al. ``Price Transparency & Physician
Quality Report Card 2017.'' Catalyst for Payment Reform. Available
at: https://www.catalyze.org/product/2017-price-transparency-physician-quality-report-card/.
\38\ Frakt, A., and Mehrotra, A. ``What Type of Price
Transparency Do We Need in Health Care?'' Annals of Internal
Medicine. April 16, 2019. Available at: https://www.acpjournals.org/doi/10.7326/M19.
\39\ Kona, M. ``State Balance-Billing Protections.'' The
Commonwealth Fund. September 16, 2020. Available at: https://www.commonwealthfund.org/publications/maps-and-interactives/2020/sep/state-balance-billing-protections.
\40\ ``Report to Congress: Self-Insured Health Benefit Plans
2019: Based on Filings through Statistical Year 2016.'' March, 2019.
Available at: https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2019.pdf; see also Fronstin, P. ``Self-
Insured Health Plans: Recent Trends by Firm Size 1996-2018.''
Employee Benefit Research Institute. No. 488. August 1, 2019.
Available at: https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_488_selfinsur-1aug19.pdf?sfvrsn=bd7e3c2f_6.
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In response to state action and consumer demands for more
information on health care pricing, and to align with increased price
transparency in other markets, health insurance issuers and self-
insured plans have moved to increase price transparency. For example,
some plans are using price transparency tools to incentivize employees
to make cost-conscious decisions when purchasing health care services.
Most large issuers have comparative cost information, which includes
rates that plans and issuers have negotiated with in-network providers
and suppliers.
However, many existing tools are either insufficient in the amount
of detail they provide or the level of accuracy available. In order to
expand price transparency to all consumers, Federal action is therefore
necessary to establish standards and universal access to this
information. In preparation for writing the proposed rules, the
Departments met with over 50 stakeholders including plans, issuers, and
third-party tool developers. Several stakeholders provided
demonstrations of their tools to the Departments. The Departments note
that over 90 percent of plans offer some version of a price comparison
tool.\41\ However, many of the plans and issuers that the Departments
met with, who did not have a tool serve large portions of participants,
beneficiaries, and enrollees. It is therefore the Departments'
understanding that there are still millions of insured Americans that
do not have access to any type of health care pricing tool. Also based
on these demonstrations, the Departments are of the view that many
price transparency tools on the market only offer wide-range estimates
or average estimates of pricing that use historical claims data and do
not always take into account the accumulated amount a participant,
beneficiary, or enrollee has paid toward their deductible or out-of-
pocket limit (sometimes referred to as an ``accumulator''). The
Departments are of the view that wide-range estimates are of limited
value to consumers, given that they may not accurately reflect an
individual's plan design and benefits, and that ranges should be
replaced by actual estimated out-of-pocket costs, in order to allow the
consumer to meaningfully predict costs. In addition, the inclusion of
negotiated rates in these tools could help show the changes to a
participant's, beneficiary's, or enrollee's costs if they have a future
need for the same service, conditioned on the level of fulfillment of
any cost-sharing responsibilities. This could help the consumer better
understand the full value of the health care they are considering and
how the cost may be different in the future when the participant's,
beneficiary's, or enrollee's accumulator resets in a new plan year.
Information on quality and results are also important for assessing the
value of care.\42\ Through this increased availability of information
and consumer comprehension, transparent pricing can apply pressure on
providers to demonstrate and improve quality and health care results.
Providers may likely then be in the position of having to justify their
costs relative to alternative options.
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\41\ ``Study: Health Plans Implement Price Transparency Tools
for Consumers.'' ACA International. April 2016. Available online at:
https://www.expressrecovery.com/file/86c228ef-245f-45cb-abd7-a30edbdec1f3.
\42\ See additional discussion of quality information in section
II.C.1 of the preamble.
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The Departments are of the view that existing price transparency
tools often function in a way that makes them difficult for users to
navigate. These tools often display information that makes it difficult
to compare one plan against another, understand the scope of services
covered and their costs, and interpret the terminology plans and
issuers use. Consumers may be discouraged by these difficult user
interfaces and may be less likely to make fully informed decisions with
their healthcare choices. Research demonstrates that poor or confusing
user interfaces will lead users to abandon engagement with the hosting
website.\43\ The Departments are of the view that it is important to
establish a minimum set of standards regarding what is acceptable so
that consumers can fully utilize all relevant information. Tools that
provide consistent information to every consumer across all markets,
and that base cost estimates on accurate and recent information, will
be a significant improvement over all or most existing options.
Accuracy and consistency are intended to give consumers confidence that
the information presented by these tools will not change significantly
from the prices they are ultimately charged. Reliability should assure
consumers that information in these tools accurately reflects plans'
and issuers' best estimates of consumer out-of-pocket costs. The
availability of these tools across most private markets will ensure
broad access for all participants, beneficiaries, or enrollees to the
intended outcomes and potential benefits of the final rules. The
Departments anticipate that participants, beneficiaries, and enrollees
will become accustomed to having access to this standardized
information, no matter what private market plan or coverage they
choose, which will make them more comfortable with using this
information in health care purchasing decisions. The Departments
further anticipate and encourage plans and issuers to include
additional functionality and innovation in existing price transparency
tools, but a baseline is necessary to give participants, beneficiaries,
and enrollees the confidence that, regardless of the tool they use,
they can expect the same standard information and functionality.
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\43\ Georgiou, M. ``User Experience Is the Most Important Metric
You Aren't Measuring.'' Entrepreneur. March 1, 2018. Available at:
https://www.entrepreneur.com/article/309161.
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C. Stakeholder Feedback and Prior Actions in Support of Transparency
In the HHS 2020 Notice of Benefit and Payment Parameters (2020
Payment Notice) proposed rule,\44\ HHS sought input on ways to provide
consumers with greater transparency regarding their own health care
data, QHP offerings on the Federally-facilitated Exchanges (FFEs), and
the cost of health care services.\45\ Additionally, HHS sought comment
on ways to further implement section 1311(e)(3) of PPACA, as
implemented by 45 CFR 156.220(d), under which, upon the request of an
enrollee, a QHP issuer must make available in a timely manner the
amount of enrollee cost sharing under the enrollee's coverage for a
specific service furnished by an in-network provider. HHS was
particularly interested in what types of data would be most useful to
improving consumers' abilities to make informed health care decisions,
including decisions related to their coverage specifications and ways
to
[[Page 72164]]
improve consumer access to information about health care costs.
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\44\ 84 FR 227 (Jan. 24, 2019).
\45\ The term ``Exchanges'' means American Health Benefit
Exchanges established under section 1311 of PPACA. See section
2791(d)(21) of the PHS Act.
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Commenters on the 2020 Payment Notice overwhelmingly supported the
idea of increased price transparency. Many commenters provided
suggestions for defining the scope of price transparency requirements,
such as providing costs for both in-network and out-of-network health
care, and providing health care cost estimates that include an
accounting for consumer-specific benefit information, like progress
toward meeting deductibles and annual limitations on cost sharing, as
well as remaining visits under visit limits. Commenters expressed
support for implementing price transparency requirements across all
private markets and for price transparency efforts to be a part of a
larger payment reform effort and a provider empowerment and patient
engagement strategy. Some commenters advised HHS to carefully consider
how such policies should be implemented, warning against Federal
duplication of state efforts and requirements that would result in
plans and issuers passing along increased administrative costs to
consumers and cautioning that the proprietary and competitive nature of
payment data should be protected.
In the summer and fall of 2018, HHS hosted listening sessions
related to the goal of empowering consumers by ensuring the
availability of useable pricing information. The listening sessions
included a wide representation of stakeholders including providers,
issuers, researchers, and consumer and patient advocacy groups.
Attendees noted that currently available pricing tools are
underutilized, in part because consumers are often unaware that they
exist,\46\ and even when used, the tools sometimes convey inconsistent
and inaccurate information.
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\46\ Miller, S. ``Healthcare Shopping Tools Often Go Unused.''
Society for Human Resource Management. May 19, 2016. Available at:
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/health-care-shopping.aspx.
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Attendees also commented that tool development could be expensive,
especially for smaller health plans, which tend to invest less in
technology because of the limited return on investment. Attendees
further commented that most tools developed to date do not allow for
comparison shopping. Attendees stated that existing tools usually use
historical claims data, which results in broad, sometimes regional,
estimates, rather than accurate and individualized prices. In a
national study, there was alignment among patients, employers, and
providers in wanting to know and discuss the cost of care at the point
of service.\47\ However, attendees noted pricing tools are rarely
available when and where consumers are likely to make health care
decisions, for example, during interactions with providers. Thus,
patients are not able to consider relevant cost issues when discussing
referral options or the tradeoffs of various treatment options with
referring providers. With access to patient-specific cost estimates for
services furnished by particular providers, referring providers and
their patients could take pricing information into account when
considering clinically appropriate treatment options. Separately, CMS
has met with members from several state Departments of Insurance to
discuss the limits to state authority to require price transparency in
a meaningful way and the benefits and drawbacks of All Payer Claims
Databases (APCDs). During these discussions, it became clear that
APCDs' reliance on historical claims data that is not necessarily
linked to a specific plan or issuer limits the utility of such
databases for consumers. These conversations helped clarify the types
of price transparency information necessary to empower consumers.
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\47\ ``Let's Talk About Money.'' University of Utah Health Home.
Available at: https://uofuhealth.utah.edu/value/lets-talk-about-money.php.
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CMS has pursued initiatives in addition to the final rules to
improve access to the information necessary to empower consumers to
make more informed decisions about their health care costs, including a
multi-step effort to implement section 2718(e) of the PHS Act. Section
2718(e) of the PHS Act requires each hospital operating within the
United States, for each year, to establish (and update) and make public
(in accordance with guidelines developed by the Secretary of HHS) a
list of the hospital's standard charges for items and services provided
by the hospital, including for diagnosis-related groups established
under section 1886(d)(4) of the Social Security Act (SSA). In the
Fiscal Year (FY) 2015 Hospital Inpatient Prospective Payment System and
Long-Term Care Hospital Prospective Payment System (IPPS/LTCH PPS)
proposed and final rules, CMS reminded hospitals of their obligation to
comply with the provisions of section 2718(e) of the PHS Act and
provided guidelines for its implementation.\48\ At that time, CMS
required hospitals to either make public a list of their standard
charges or their policies for allowing the public to view a list of
those charges in response to an inquiry. In addition, CMS stated that
it expected hospitals to update the information at least annually, or
more often as appropriate, to reflect current charges. CMS also
encouraged hospitals to undertake efforts to engage in consumer-
friendly communication of their charges to enable consumers to compare
charges for similar services across hospitals and to help them
understand what their potential financial liability might be for items
and services they obtain at the hospital.
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\48\ 79 FR 27978, 28169 (May 15, 2014) and 79 FR 49854, 50146
(Aug. 22, 2014), respectively.
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In the FY 2019 IPPS/LTCH PPS proposed and final rules, CMS again
reminded hospitals of their obligation to comply with section 2718(e)
of the PHS Act and announced an update to its guidelines.\49\ The
updated guidelines, which have been effective since January 1, 2019,
require hospitals to make available a list of their current standard
charges (whether in the form of a ``chargemaster'' or another form of
the hospital's choice) via the internet in a machine-readable format
and to update this information at least annually, or more often as
appropriate.
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\49\ 83 FR 20164, 20548 (May 7, 2018) and 83 FR 41144, 41686
(Aug. 17, 2018), respectively.
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In response to stakeholder feedback and in accordance with
Executive Order 13877, issued on June 24, 2019,\50\ CMS took another
important step toward improving health care value and increasing
competition in the Calendar Year 2020 Hospital Outpatient Policy
Payment System (OPPS) Policy Changes and Payment Rates and Ambulatory
Surgical Center Payment System Policy Changes and Payment Rates: Price
Transparency Requirements for Hospitals to Make Standard Charges Public
final rule (Hospital Price Transparency final rule) by codifying
regulatory requirements that implement section 2718(e) of the PHS Act,
as well as a regulatory scheme under section 2718(b)(3) of the PHS Act
that enables CMS to enforce those requirements.\51\ The price
transparency disclosure requirements that CMS finalized in the Hospital
Price Transparency final rule will be effective on January 1, 2021, and
they require hospitals to make publicly available, as applicable, their
gross charges (as found in the hospital's chargemaster), payer-specific
negotiated charges, discounted cash prices, and de-identified minimum
and maximum negotiated charges for all items and services they provide
through a single online machine-readable file that is updated at least
once annually. Additionally, the Hospital Price
[[Page 72165]]
Transparency final rule requires hospitals to display online in a
consumer-friendly format, as applicable, the payer-specific negotiated
charges, discounted cash prices (or, to the extent one does not exist
for a shoppable service, the undiscounted gross charge) and de-
identified minimum and maximum negotiated charges for as many of the 70
shoppable services selected by CMS that the hospital provides and as
many additional hospital-selected shoppable services as are necessary
for a combined total of at least 300 shoppable services (or if the
hospital provides fewer than 300 shoppable services, then for as many
as the hospital provides). The rule defines a shoppable service as a
service that can be scheduled by a health care consumer in advance and
further explains that a shoppable service is typically one that is
routinely provided in non-urgent situations that does not require
immediate action or attention to the patient, thus allowing patients to
price shop and schedule such a service at a time that is convenient for
them.\52\
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\50\ 84 FR 30849 (Jun. 27, 2019). The Executive order was issued
on June 24, 2019 and was published in the Federal Register on June
27, 2019.
\51\ 84 FR 65524 (Nov. 27, 2019).
\52\ 84 FR 65524, 65564 (Nov. 27, 2019).
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In addition to making pricing information available for items and
services provided by hospitals, the Administration has also been
engaged in increasing transparency of prescription drug pricing and
lowering the costs of prescription drugs. Four Executive orders direct
CMS and other HHS agencies to develop and issue tools, models, and
several regulations to increase competition and lower patients' drug
costs.\53\ The actions directed in these Executive orders supplement
those CMS has already taken to increase drug-pricing transparency and
lower drug costs. Through the Drug Spending Dashboard, CMS publishes
data on Medicare and Medicaid spending for prescription drugs in an
interactive web-based tool so researchers and consumers can easily sort
the data to identify trends. Over the past four years, CMS has expanded
this dashboard to include reporting on payments for prescription drugs
in their first year on the market and information on the drugs'
manufacturers.\54\ Through the Part D Senior Savings model, beginning
January 1, 2021, CMS is testing a change to the Manufacturer Coverage
Gap Discount Program (the ``discount program'') to allow Part D
sponsors to offer a Part D benefit design that includes predictable
copays in the deductible, initial coverage, and coverage gap phases for
a broad range of insulins included in the Model by offering
supplemental benefits that apply after manufacturers provide a
discounted price.\55\
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\53\ ``Trump Administration Announces Historic Action to Lower
Drug Prices for Americans.'' United States Department of Health and
Human Services. July 24, 2020. Available at: https://www.hhs.gov/about/news/2020/07/24/trump-administration-announces-historic-action-lower-drug-prices-americans.html.
\54\ ``CMS Releases Enhanced Drug Dashboards Updated with Data
for 2018.'' Centers for Medicare & Medicaid Services.'' December 19,
2019. Available at: https://www.cms.gov/newsroom/press-releases/cms-releases-enhanced-drug-dashboards-updated-data-2018; see also ``CMS
Updates Drug Dashboards with Prescription Drug Pricing and Spending
Data.'' Centers for Medicare & Medicaid Services. March 14, 2019.
Available at: https://www.cms.gov/newsroom/press-releases/cms-updates-drug-dashboards-prescription-drug-pricing-and-spending-data.
\55\ ``Part D Senior Savings Model.'' Centers for Medicare &
Medicaid Services. Available online at: https://innovation.cms.gov/innovation-models/part-d-savings-model.
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CMS issued regulations addressing prescription drug
transparency,\56\ including a regulation implementing the statutory
prohibition on pharmacist gag clauses,\57\ helping to ensure patients
have information on lower cost alternatives or that they can save money
by paying cash. As part of the Calendar Year (CY) 2018 Medicare
Physician Fee Schedule, CMS adopted a policy that all FDA-approved Part
B biosimilars would be assigned their own HCPCS codes. Under this
revised coding policy, CMS pays for separately payable Part B
biosimilars based on its own Average Sales Price (ASP) plus 6 percent
of the ASP of its reference product. This policy change was made to
promote a stable and robust biosimilars market that drives competition
and lowers prices.
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\56\ See 84 FR 23832 (May 23, 2019) (HHS final rule finalizing
policies that aimed to ``increase transparency of drug pricing and
drug price increases, giv[e] beneficiaries and prescribers tools to
help improve adherence, lower prescription drug costs, and minimize
beneficiary out-of-pocket costs''); see, for example, 42 CFR 423.128
(requiring additional information in Part D explanations of benefits
to increase transparency); 42 CFR 423.160 (requiring adoption of e-
prescribing standards to increase transparency).
\57\ 42 CFR 423.120(a)(8)(iii); see also Verma, S. ``Memorandum
to All Part D Plan Sponsors: Unacceptable Pharmacy Gag Clauses.''
Centers for Medicare & Medicaid Services. May 17, 2018. Available
at: https://downloads.cms.gov/files/2018-05-17.pdf.
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In the CY 2019 Medicare Advantage and Part D final rule, CMS
adopted a policy to allow for certain low-cost generic drugs to be
substituted onto plan formularies at any point during the year, so
beneficiaries immediately benefit and have lower cost sharing.\58\ The
Modernizing Part D and Medicare Advantage To Lower Drug Prices and
Reduce Out-of-Pocket Expenses rule \59\ finalized in May 2019 requires
Part D plans to implement, no later than January 1, 2021, a real-time
benefit tool that can be integrated into at least one prescriber's
electronic prescribing or EHR system to provide patient-specific
formulary and benefit information, including cost sharing.\60\ The rule
also requires that beginning January 2021, the Explanation of Benefits
document that Part D enrollees receive each month must include
information on drug price increases and lower-cost therapeutic
alternatives. In June 2020, CMS proposed \61\ further policy changes
that would begin removing barriers to value-based purchasing
arrangements between drug manufacturers and payers.\62\ Value-based
payments for prescription drugs has the potential to increase patient
access to new medicines by holding prescription drug manufacturers
accountable for outcomes their drug achieves, as well as creating
alternatives to traditional cost controls that may impede patient
access.\63\
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\58\ ``CMS lowers the cost of prescription drugs for Medicare
beneficiaries.'' Centers for Medicare & Medicaid Services. April 2,
2018. Available at: https://www.cms.gov/newsroom/press-releases/cms-lowers-cost-prescription-drugs-medicare-beneficiaries.
\59\ 84 FR 23832 (May 23, 2019).
\60\ ``CMS Takes Action to Lower Prescription Drug Prices and
Increase Transparency.'' Centers for Medicare & Medicaid Services.
May 16, 2019. Available at: https://www.cms.gov/newsroom/press-releases/cms-takes-action-lower-prescription-drug-prices-and-increase-transparency.
\61\ ``Establishing Minimum Standards in Medicaid State Drug
Utilization Review (DUR) and Supporting Value-Based Purchasing (VBP)
for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and
Third Party Liability (TPL) Requirements (CMS 2482-P) Fact Sheet.
Centers for Medicare & Medicaid Services. June 17, 2020. Available
at: https://www.cms.gov/newsroom/fact-sheets/establishing-minimum-standards-medicaid-state-drug-utilization-review-dur-and-supporting-value-based.
\62\ 85 FR 37286 (Jun. 19, 2020).
\63\ Verma, S. ``CMS's Proposed Rule On Value-Based Purchasing
For Prescription Drugs: New Tools For Negotiating Price For The Next
Generation Of Therapies.'' Health Affairs. June 17, 2020. Available
at: https://www.healthaffairs.org/do/10.1377/hblog20200617.728496/full/.
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As part of its effort to incentivize states to pursue innovative
responses to rising drug prices, CMS approved nine states' (and the
District of Columbia's) plan amendment proposals to negotiate
supplemental rebate agreements involving value-based purchasing
arrangements with drug manufacturers.\64\ These supplemental rebate
agreements allow states to link payment for prescription drugs to the
value delivered to patients. Increasing states' flexibility empowers
them to develop policies that are effective and responsive to local
conditions and price ``hot spots'' that lower costs, increase
[[Page 72166]]
the predictability of expenses, and improve access for patients.
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\64\ ``Medicaid State Plan Amendments.'' Centers for Medicare &
Medicaid Services. Available online at: https://www.medicaid.gov/medicaid/medicaid-state-plan-amendments/index.html.
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As it currently stands, and despite ongoing Federal efforts to
improve price transparency, there continues to be a lack of
standardized pricing information to assist consumers in the private
market when shopping for health care items and services. While there
are several efforts across states, 33 still do not have comprehensive
statewide price transparency initiatives,\65\ and as noted earlier,
sometimes cannot legally require private market plans and issuers to
provide real-time, out-of-pocket cost estimates to participants,
beneficiaries, and enrollees.
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\65\ LaPointe, J. ``Few States Have Robust Healthcare
Transparency Laws.'' RevCycle Intelligence. May 11, 2020. Available
at: https://revcycleintelligence.com/news/few-states-have-robust-healthcare-price-transparency-laws.
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The Departments have concluded that the Hospital Price Transparency
final rule and the other efforts described earlier in this section
cannot result in enrollees receiving complete price estimates for
health care items and services because, as the GAO concluded, complete
price estimates require pricing information from both providers and
health insurance issuers.\66\ In other words, this rule complements
existing State, Federal, and private sector price transparency efforts
by ensuring that pricing information is available from both hospitals
and payers in both the public and private markets and by expanding
transparency to pricing information for health care items and services
provided outside of a hospital setting. As a result of these rules,
regardless of where a consumer seeks information, be it their plan or
issuer, or their hospital, they will have guaranteed access to up to
date and accurate pricing information. In addition, because section
2718(e) of the PHS Act applies only to items and services provided by
hospitals the Hospital Price Transparency final rule does not address
price transparency with respect to items and services provided by other
health care providers. Accordingly, the Departments have concluded that
additional price transparency efforts are necessary and required under
the statute to empower a more price-conscious and responsible health
care consumer, promote competition in the health care industry, and
lower the overall rate of growth in health care spending.\67\
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\66\ GAO-11-791 (Sep. 2011).
\67\ This view is consistent with the legislative history of
PPACA. As initially introduced in the Senate on November 19, 2009,
PPACA included only the requirement on hospitals to disclose
standard charges included in section 2718. On December 1, 2009, in
comments supporting the hospital transparency requirement, Sen. Max
Baucus noted, ``I think the same should also apply to physicians so
people have a better idea what they will pay or their insurance
company will pay for these procedures.'' https://www.congress.gov/111/crec/2009/12/08/CREC-2009-12-08.pdf. Sections 2715A and
1311(e)(3)(C) were then amended to PPACA on December 19 in the final
managers amendment before passage in the Senate. Available at:
https://www.congress.gov/111/crec/2009/12/19/CREC-2009-12-19.pdf.
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The Departments are of the view that the disclosures required under
the final rules are necessary and appropriate to more fully implement
section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA to
ensure that consumers have ready access to the information they need to
estimate their potential out-of-pocket costs for health care items and
services before that service is rendered or that item is delivered. The
final rules are also intended to empower consumers by incentivizing
market innovators to help consumers understand how their plan or
coverage pays for health care and to shop for health care items and
services based on price, which is a fundamental factor in any
purchasing decision.
D. Executive Order
On June 24, 2019, President Trump issued Executive Order 13877,
``Executive Order on Improving Price and Quality Transparency in
American Healthcare to Put Patients First.'' Section 3(b) of Executive
Order 13877 directed the Secretaries of the Departments to issue an
advance notice of proposed rulemaking (ANPRM), consistent with
applicable law, soliciting comment on a proposal to require health care
providers, health insurance issuers, and self-insured group health
plans to provide or facilitate access to information about expected
out-of-pocket costs for items or services to patients before they
receive care. The Departments considered the issue, including by
consulting with stakeholders, and determined that an NPRM, rather than
an ANPRM, would allow for more specific and useful feedback from
commenters, who would be able to respond to specific proposals.
E. Proposed Rules
In response to Executive Order 13877 and to also implement
legislative mandates under sections 1311(e)(3) of PPACA and section
2715A of the PHS Act, the Departments published an NPRM entitled
``Transparency in Coverage'' on November 27, 2019 (to be codified at 26
CFR part 54, 29 CFR part 2590, and 45 CFR part 147) (the proposed
rules) with comments requested by January 14, 2020.\68\ In response to
requests from stakeholders, the Departments extended the comment period
15 days, to January 29, 2020.\69\ The proposed rules set forth proposed
requirements for group health plans and health insurance issuers in the
individual and group markets to disclose cost-sharing information upon
request to a participant, beneficiary, or enrollee, including an
estimate of an individual's cost-sharing liability for covered items or
services furnished by a particular provider. The Departments proposed
that plans and issuers be required to make such information available
on an internet website and, if requested, through non-internet means,
thereby allowing a participant, beneficiary, or enrollee to obtain an
estimate and understanding of the individual's out-of-pocket expenses
and effectively shop for items and services. The proposed rules also
included proposals to require plans and issuers to disclose in-network
provider negotiated rates, and historical out-of-network allowed
amounts through two machine-readable files posted on an internet
website, thereby allowing the public to have access to health coverage
information that can be used to understand health care pricing and
potentially dampen the rise in health care spending.
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\68\ 84 FR 65464 (Nov. 27, 2019).
\69\ 85 FR 276 (Jan. 3, 2020).
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The proposed rules also included requests for information (RFIs) on
topics closely related to the rulemaking. Due to the design and
capability differences among the information technology (IT) systems of
plans and issuers, as well as difficulties consumers experience in
deciphering information relevant to health care and health insurance,
the Departments sought comment on additional price transparency
requirements that could supplement the proposed requirements for
disclosing cost-sharing information to participants, beneficiaries, or
enrollees and the proposed requirements for public disclosure of
negotiated rates and historical allowed amount data for covered items
and services from out-of-network providers. Specifically, the
Departments sought comment on whether plans and issuers should be
required to disclose information necessary to calculate a
participant's, beneficiary's, or enrollee's cost-sharing liability
through a publicly-available, standards-based application programming
interface (API).
Such a requirement would build off a final rule, ``Medicare and
Medicaid Programs; Patient Protection and Affordable Care Act;
Interoperability and Patient Access for Medicare
[[Page 72167]]
Advantage Organization and Medicaid Managed Care Plans, State Medicaid
Agencies, Children's Health Insurance Program (CHIP) Agencies and Chip
Managed Care Entities, Issuers of Qualified Health Plans in the
Federally-Facilitated Exchanges and Health Care Providers'' (CMS
Interoperability & Patient Access final rule), that CMS published on
May 1, 2020.\70\ That rule requires Medicare Advantage organizations,
Medicaid and CHIP Fee-for-Service programs, Medicaid managed care
plans, CHIP managed care entities, and QHP issuers in the FFEs to
provide enrollees with access to select data, including claims data,
through a standards-based API that conforms to the technical standards
adopted in the Office of the National Coordinator for Health
Information Technology (ONC) 21st Century Cures Act final rule at 45
CFR 170.215. The CMS Interoperability & Patient Access final rule
requires certain entities, such as FFE QHP issuers, to provide certain
data through a standards-based API. The Departments appreciate the
comments received in response to the API RFI and will use the comments
to inform the need for future rulemaking regarding whether plans and
issuers should be required to disclose information necessary to
calculate cost-sharing liability through a publicly-available,
standards-based API. HHS will also monitor the implementation of the
CMS Interoperability & Patient Access final rule to inform any such
future rulemaking.
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\70\ 85 FR 25510 (May 1, 2020).
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The proposed rule also included RFIs on how provider quality
measurements and reporting in the private health insurance market may
be used to complement cost-sharing information for plans and issuers in
the private health insurance market. The Departments sought comment on
how existing quality data on health care provider items and services
could be leveraged to complement the proposals in the proposed rules.
The primary goal of the proposed and final rules is making information
available to address the absence of price transparency in the health
care market; the final rules do not address health care quality at this
time.
HHS also proposed to amend its MLR program rules using the
authority under section 2718(c) of the PHS Act, under which the
standardized methodologies for calculating measures of the activities
reported under section 2718(a) of the PHS Act shall be designed to take
into account the special circumstances of smaller plans, different
types of plans, and newer plans. Specifically, HHS proposed to
recognize the special circumstances of a different and newer type of
plan for purposes of MLR reporting and calculations for plans that
share savings with consumers who choose lower-cost, higher-value
providers. HHS proposed to amend 45 CFR 158.221 to add a new paragraph
(b)(9) to allow any such ``shared savings'' payments made by an issuer
to an enrollee as a result of the enrollee choosing to obtain health
care from a lower-cost, higher-value provider, to be factored into an
issuer's MLR numerator, beginning with the 2020 MLR reporting year (for
reports filed by July 31, 2021).
The Departments requested comments on all aspects of the proposed
rules, as well as a number of specific issues. The Departments received
over 25,000 comments in response to the proposed rules from a range of
stakeholders, including plans and issuers, health care providers,
prescription drug companies, employers, state regulators, health IT
companies, health care policy organizations and think tanks, and
individuals. No requests for a public hearing were received. The
Departments received a number of comments and suggestions that were
outside the scope of the proposed rules that are not addressed in the
final rules (for example, regarding hospital prices, other methods for
reducing health care and prescription drug costs, consumer education
and provider directories). After careful consideration of the comments,
the Departments are finalizing the proposed rules with certain
modifications made in response to comments. These modifications are
discussed later in this preamble.
F. Legal Authority
Several commenters questioned the Departments' legal authority
regarding various aspects of the proposed rules. The Departments are of
the view that the legal authorities identified earlier in this preamble
are sufficient to support the final rules.
1. Statutory Authority Under Section 1311(e)(3) of PPACA
Several commenters contended that section 1311(e)(3)(A)(ix) of
PPACA does not give the Departments statutory authority to require that
plans and issuers make the rates they have negotiated with providers
and out-of-network allowed amounts publicly available. The commenters
noted that section 1311(e)(3)(A) of PPACA enumerates eight specific
categories of information subject to the transparency in coverage
mandate followed by a ninth ``catchall'' category consisting of ``other
information as determined appropriate by the Secretary.'' \71\ These
commenters maintained that the Secretary of HHS's authority under
section 1311(e)(3)(A)(ix) of PPACA is insufficient to support a
requirement to publicize negotiated rates because they are not
sufficiently similar to the other categories of information identified
under section 1311(e)(3)(A) of PPACA.
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\71\ See section 1311(e)(3)(A)(i) through (viii) of PPACA.
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The Departments disagree with these comments and are of the view
that the information required to be disclosed under this rule fits
squarely within the scope of information that plans and issuers may be
required to disclose under section 1311(e)(3)(A)(ix) of PPACA and
section 2715A of the PHS Act. Section 1311(e)(3)(A)(i) to (viii) of
PPACA outlines specific information and data that must be submitted to
the Exchange, the Secretary of HHS, the relevant State insurance
commissioner, and the public on an accurate and timely basis. In
addition, section 1311(e)(3)(A)(ix) of PPACA requires health plans to
submit ``other information as determined appropriate by the
Secretary.'' Under established principles of statutory construction,
when a general term follows a list of specific terms in a statute, the
general term is construed to encompass subjects of a similar character
to the specific terms. The principle of ejusdem generis guides courts
in evaluating a catch-all at the end of a list. Therefore, when a
statute allows an implementing agency to exercise its discretion by
adding additional items to a list, the implementing agency is empowered
to add additional items as long as those items are of similar character
to the items enumerated in the statute.\72\ In this case, the statutory
list includes information and data useful to evaluate the coverage
offered by plans and issuers with an emphasis on business practices,
financial stability, and consumer experience. The list also includes
information useful to regulators and the public in general to evaluate
plans' and issuers' business practices and activity in the market.
Given that the list includes some disclosures that are more immediately
useful to individual consumers and others that are more immediately
useful to regulators, the catchall provision is reasonably and best
read as Congress' recognition that the Secretary of HHS (and,
therefore, the Departments, by virtue of their joint authority under
section 2715A of the PHS Act) would need broad flexibility to require
the
[[Page 72168]]
disclosure of information as appropriate to deliver the transparency
necessary for consumers to understand their coverage options and for
regulators to hold plans and issuers accountable.
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\72\ See Norfolk & Western R. Co. v. Train Dispatchers, 499 U.S.
117, 128-29 (1991).
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It is important to note that Congress considered one amendment that
would have only required public disclosure at least annually of in-
network allowed charges and expected allowed charges for out of network
without allowing the Secretary discretion to add to the content of the
required disclosure.\73\ Instead of adopting this prescriptive
approach, Congress required public disclosure of a broader set of
information that similarly included payments for out-of-network
services, as well as providing the Secretary discretion to require
disclosure of other information. While Congress did not specifically
include in-network allowed charges in the provision enacted, the
discretion they provided suggests they understood that the Secretary
might later find that requiring the disclosure of additional
information, including information considered by Congress, might be
useful and appropriate. That Congress considered and rejected a more
prescriptive approach strongly suggests Congress intended that the
Secretary have the ability to mandate more particularized disclosures
in the future, including the disclosure of in-network negotiated
rates.\74\
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\73\ Congressional Record 155: 183 (December 8, 2009) p. S12716.
Available at: https://www.congress.gov/111/crec/2009/12/08/CREC-2009-12-08-senate.pdf.
\74\ See, for example, Lehman v. Nakshian, 453 U.S. 156, 167-8
(1981) (citing a rejected amendment to a Federal statute as evidence
of Congressional intent).
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A plan's or issuer's negotiated rates provide important information
to help consumers both evaluate their options before buying coverage
and, after choosing coverage, evaluate how to use their coverage when
they need care. Those shopping for coverage will benefit from knowing
how effectively a plan or issuer negotiates rates; for example, by
comparing the rates one plan or issuer pays a provider for a particular
item or service that this consumer knows they, or their family, will
need in the future, which can then allow them to shop and compare which
plans and issuers offer the most value. Once coverage is obtained,
knowing negotiated rates upfront will ensure consumers covered under a
variety of plan designs and coverage options to, in each case, have
access to the information they need to obtain health care services in
an efficient, cost-effective manner, when considering available options
for a shoppable service. As discussed earlier in this preamble, making
negotiated rates public also strengthens other health care
stakeholders' ability to support consumers. Because negotiated rates
provide important information to help people--including consumers,
regulators and the general public--evaluate the coverage offered by a
plan or issuer, it clearly falls within the scope of information
already required under section 1311(e)(3)(A) of PPACA. As discussed in
more detail later in this section, out-of-network allowed amounts
likewise provide vital information to help evaluate coverage.
Out-of-network allowed charges also provide consumers with
important information. Consumers may opt for out-of-network services
for numerous reasons, such as the unavailability of an in-network
provider who can meet certain medical needs, an existing relationship
with an out-of-network provider, the recommendation of another
provider, or personal convenience. Disclosure of estimates of out-of-
network allowed amounts is essential to the ability of consumers
considering out-of-network services to form an estimate of their
potential liability. Limiting transparency in pricing requirements to
only providers under contract with a carrier would prevent transparency
for all such services, contrary to the plain language of the
statute.\75\ Indeed, the language of the statute (for example, the
requirement of section 1311(e)(3)(B) of PPACA that the intended
audience, including individuals with limited English proficiency, can
readily understand and use because that language is concise, well-
organized, and follows other best practices of plain language writing)
indicates an intention to assist consumers by enhancing their ability
to make cost-conscious decisions; this is an essential component of
establishing and maintaining robust market competition with costs that
are reasonable and plausibly tethered to standard market discipline. As
the preamble to the proposed rules observed, there is substantial
evidence that increased price transparency provides consumers and the
public at large with the information that is necessary to improve
market efficiency.\76\ For these reasons, the Departments are of the
view that requiring disclosure of estimates of out-of-network allowed
amounts, which reflect out-of-network benefits under a plan, is well
within both the text and spirit of the statute and its aims to assist
consumers in selecting providers, evaluating market options, increasing
competition, and reducing market disparities. The Departments have
identified these requirements as beneficial to the ongoing efforts of
employers and regulators to aid consumers, and as consistent with the
goals of the statute; thus, the Departments reject the assertion of
commenters that these purposes are beyond the scope of the statute.
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\75\ Section 1311(e)(3)(A)(vii) of PPACA.
\76\ 84 FR 65464, 65489, 65495 (Nov. 27, 2019); see also Austin,
D.A., and Gravelle, J.G. ``Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in Other Markets for
the Healthcare Sector.'' United States Congress Congressional
Research Service. July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf; see also Brown, Z.Y. ``Equilibrium Effects
of Health Care Price Information.'' 100 Rev. Econ. & Stat. 1 (2018).
Available at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Enthoven, A.
Market Forces and Efficient Health Care Systems. Health Affairs,
Vol. 23, No. 2. Available at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.25.
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Several commenters asserted that the specific justifications the
Departments cite as support for mandating the disclosure of negotiated
rates are unrelated to the purposes authorized by statute. They
asserted that those purposes--assisting consumers in selecting health
care providers, assisting consumers in evaluating options in the
market, increasing competition and reducing disparities in the market,
assisting employers, and assisting state regulators--have no
relationship to the statutory purpose of providing transparency in
coverage for consumers. Moreover, commenters stated that the statute
does not authorize the use of price transparency mechanisms to affect
issuer and provider rate negotiations or health care costs generally,
to assist employers in negotiations, or to aid state regulators in
their duties. The Departments, however, find ample support in PPACA
evidencing the relationship between the purposes intended to be served
by this final rule, the overall purposes of PPACA, and the PPACA's
price transparency measures, including section 1311(e)(3).
The purposes underlying the final rule's requirement to disclose
negotiated rates are directly tied to providing transparency in
coverage to consumers. The negotiated rate information that the final
rules require to be disclosed pursuant to the Departments' authority
under section 1311(e)(3)(A)(ix) of PPACA, and section 2715A of the PHS
Act, is directly relevant to providing consumers with transparent
pricing information sufficient to allow them to assess, in advance of
receiving services, their liability under a health plan or
[[Page 72169]]
health coverage in the numerous instances in the course of any plan
year in which the negotiated rate will determine all or a portion of a
consumer's liability. This is important information that helps
consumers under a wide variety of plan designs and cost-sharing
arrangements in both choosing and using coverage. The Departments are
requiring the disclosure of cost information to further the goal of
price transparency and are doing so under the authority of section
1311(e)(3) of PPACA.
Two commenters suggested that the proposal to require the release
of negotiated rates in machine-readable format is not authorized under
the statute. The statute mandates that transparency in coverage
information ``shall be provided in plain language . . . that the
intended audience, including individuals with limited English
proficiency, can readily understand and use because it is concise,
well-organized, and follows best practices of plain writing.'' \77\
These commenters contended that machine-readable information is not
plain language that is accessible or understandable to the typical
consumer, and is therefore not within the scope of information
authorized for public disclosure under section 1311(e)(3)(B) of PPACA.
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\77\ Section 1311(e)(3)(B) of PPACA.
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The Departments disagree with this assertion. Consistent with the
statute, the final rules require the machine-readable files to include
a plain language description for each billing code. The proposed
requirement that two data files be provided in ``machine-readable
format''--one containing negotiated rates and the other containing out-
of-network allowed amounts--is a purely operational consideration
intended to ensure that the file data can be imported or read by a
computer system directly, without altering the data, and without
reliance on proprietary software.\78\ Under section 1311(e)(3)(B) of
PPACA, the ``plain language'' requirement concerns information to be
made available to the public, the ``intended audience,'' per the
statute. The Departments require the publication of data in machine-
readable files so that the required information may be presented to all
members of the intended audience in a concise, well-organized manner
that follows best practices of plain writing relevant to the intended
audience.
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\78\ 84 FR 65464, 65481 (Nov 27. 2019).
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The Departments explain elsewhere in the preamble that the intended
audience for the information required to be published under the final
rules includes all consumers and purchasers of health care items and
services, including individual consumers, employers, and government
health care programs. The intended audience also includes health care
stakeholders such as researchers, legislators, and regulators, as well
as application developers who could make the information usable and
easily understood by laypersons. Accordingly, application developers
will be able to access the data in a format that is easily used and
understood using skills common to application developers. This same
expertise allows such innovators to incorporate large data sets into
easy-to-use internet-based tools and mobile applications that will
present information to laypersons in easy-to-understand, plain language
that is sufficiently concise and well-organized. The Departments are of
the view that providing the files in machine-readable format is an
effective and necessary mechanism to ensure that price transparency
information be made available to all members of the intended audience
in a consistent, understandable, plain language format, as the statute
requires.
One commenter suggested that the disclosures to the public required
under section 1311(e)(3)(A) of PPACA consist of aggregated data only
and do not contemplate or allow public disclosure of specific rate and
price information. The Departments disagree. While it is true that
several of the data elements listed under section 1311(e)(3)(A) of
PPACA are general in nature, such as financial disclosures and
enrollment data, this fact does not compel the conclusion that all
elements listed must be construed as requiring aggregated information.
As noted above, the list encompasses information and data useful to the
evaluation of plans and issuers by all varieties of health care
consumer, including individuals, employers, and government programs.
Certain elements provide information specific to the benefits and
protections a plan or issuer's coverage provides to an individual,
including claims payment policies and information on enrollee rights
under the law. In particular, the data element listed at section
1311(e)(3)(A)(vii) of PPACA encompasses ``information on cost sharing
and payments with respect to any out-of-network coverage,'' which, by
its plain terms, does not contemplate general or cumulative
information.
The final rules specify the nature of the information that must be
made available pursuant to sections 1311(e)(3)(A)(vii) and (ix) of
PPACA, and the manner in which it is to be made available to fully
implement the goals and purposes of the statute. Section 1311(e)(3)(C)
of PPACA concerns disclosures to participants, beneficiaries, and
enrollees receiving services from participating providers only, whereas
section 1311(e)(3)(A) of PPACA concerns disclosures to the public
generally and incorporates out-of-network payment information as well.
Taken together, and as implemented under the final rules, the statute
and regulatory schemes cover all persons seeking health pricing
information in a given market, and advance the purposes of enhancing
competition, reducing price disparities, and ultimately lowering costs
through transparency in coverage.
Ultimately, by adding section 2715A of the PHS Act and section
1311(e)(3) of PPACA through the manager's amendment prior to passing
PPACA in the Senate, Congress made transparency a key component of the
PPACA's comprehensive framework for regulating private health coverage
through Federal law. Notably, in contrast to the amendment rejected by
Congress discussed earlier in this preamble, the transparency in
coverage provisions signed into law provide a far more comprehensive
and expansive approach toward providing transparency. The law covers
nearly all private health plans, requires disclosure by plans through
an internet website, requires disclosures to more entities, requires a
broader set of information disclosures, and provides additional
discretion to expand information disclosures. By taking this approach,
Congress recognized both the importance and the complexity of requiring
transparency. The discretion provided under the statute ensures that
the Departments can accommodate changes in technology and health care
markets, as well as build on the information disclosures specifically
itemized in the statute.
A commenter also contended that the proposal to require issuers to
make estimates of out-of-network allowed amounts available through the
internet-based self-service tool is not authorized by the statute. This
commenter asserted that section 1311(e)(3)(C) of PPACA only authorizes
a requirement that payers make available information concerning cost-
sharing obligations with respect to items or services furnished by a
participating provider, not by out-of-network providers.
The Departments disagree and are of the view that the statute fully
supports a requirement that plans and issuers make available
information concerning cost-sharing obligations with respect to
[[Page 72170]]
items or services furnished by out-of-network providers. The
information to be made available under section 1311(e)(3) specifically
includes ``[i]nformation on cost sharing and payments with respect to
any out-of-network coverage,'' as well as ``[o]ther information as
determined appropriate by the Secretary.'' \79\ While section
1311(e)(3)(C) of PPACA focuses primarily on providing information to
enrollees, section 1311(e)(3)(A) of PPACA authorizes the Departments to
make certain out-of-network information available to the public, which
includes participants, beneficiaries, and enrollees. Thus the
Departments reasonably determined that section 1311(e)(3)(A) and (C),
together, authorize the requirement that plans and issuers provide cost
estimates for covered items and services provided by out-of-network
providers.
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\79\ Section 1311(e)(3)(A) of PPACA; see also Section
1311(e)(3)(A)(vii) and (ix) of PPACA.
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2. Constitutional Concerns
Several commenters asserted that requiring issuers to make rates
they have negotiated with providers available to the public constitutes
compelled commercial speech in violation of the First Amendment to the
Constitution, and an unlawful taking of trade secrets without just
compensation in violation of the Fifth Amendment. Commenters cited
various reasons for their belief that the requirement in the proposed
rules to disclose negotiated rates to the public could not survive
constitutional scrutiny.
Several commenters contended that the proposed requirement
constituted compelled commercial speech, and that the rationale the
Departments articulated to justify the proposed requirement failed to
meet the legal standard necessary to justify such action. One commenter
asserted that a standard of constitutional scrutiny higher than that
relevant to compelled commercial speech applies to the requirement to
publish negotiated rates because, the commenter contended, the
disclosure of negotiated rates does not propose a future commercial
transaction. Some commenters challenged the proposed rules on the basis
that negotiated rates have little or no relevance or value to consumers
attempting to ascertain their potential liability for a particular
service at a given point in time in the future because negotiated rates
do not reflect the terms of different plan designs or the status of the
individual consumer at a given point in time in relation to cost-
sharing obligations, in particular any annual deductible.
Two commenters asserted that the requirement to publicly disclose
negotiated rates would go well beyond the stated goal of providing
notice to participants, beneficiaries, and enrollees of cost-sharing
liability for covered services because it calls for negotiated rates to
be available to the public generally, not just to enrolled consumers
inquiring about their coverage. They also claimed that disclosure of
negotiated rates would be extremely burdensome because fulfilling the
mandate would require the disclosure of millions, or even billions, of
data points. One commenter asserted that because the requirement to
publish negotiated rates would not be useful to consumers in all
situations, the requirements in the proposed rules were not narrowly
tailored enough to survive constitutional scrutiny.
Some commenters also contended that the Departments' other stated
interests in mandating the publication of negotiated rates, including
lowering prices, increasing competition, and informing decision-making
in the market generally, are not authorized under relevant statute;
therefore, the breadth of these requirements is overly burdensome and
inclusive of information not necessary to advance the goals of the
statute. These commenters concluded that, to the extent the mandated
publication of negotiated rates is calculated to advance those
purposes, they are not sufficiently tailored to statutory goals to
survive constitutional scrutiny.
a. First Amendment Compelled Speech
The Departments disagree that the proposed rules and the final
rules run afoul of the First Amendment and would not survive
constitutional scrutiny. As the United States Supreme Court recognized
in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) and
recently confirmed in National Institute of Family and Life Advocates
v. Becerra, 138 S. Ct. 2361, 2372, 2376 (2018) (``NIFLA''), required
disclosures of factual, uncontroversial information in commercial
speech are subject to more deferential First Amendment scrutiny. Under
the approach articulated in Zauderer, courts have upheld required
disclosures of factual information in the realm of commercial speech
where the disclosure requirement reasonably relates to a government
interest and is not unjustified or unduly burdensome such that it would
chill protected speech. See, e.g., Am. Meat Inst. v. U.S. Dept. of
Agric., 760 F.3d 18, 27 (D.C. Cir. 2014); Mass. Ass'n of Private Career
Sch. v. Healey, 159 F. Supp. 3d 173, 201 (D. Mass. 2016).
The Departments articulated substantial governmental interests in
proposing these requirements: Assisting consumers of health care
services in understanding the costs for which they will be liable for
covered services prior to the delivery of the services; assisting other
consumers of health care, such as employers and government health
benefits programs, in evaluating and negotiating coverage options and
obtaining the most value for health care dollars; and supporting a
market-driven health care economy that is sustainable. The preamble to
the proposed rules also explained how the information required to be
disclosed under the proposed rules is of substantial value to
consumers, including health plan participants, beneficiaries, and
enrollees who have and have not satisfied their annual deductible or
reached their maximum out-of-pocket limit, and that remains true under
the final rules. For such consumers who have not met their deductibles,
knowledge of negotiated rates is necessary for estimating their out-of-
pocket costs because these consumers generally will be responsible for
paying the full negotiated rate for health care items and services
until they reach their deductible (or the maximum annual limit on cost
sharing).
As the Departments noted earlier in the preamble, between the
enactment of PPACA and 2019, average family deductibles for private
sector employees increased by 85 percent, up to $3,655 in 2019.\80\
Consumers in the private health insurance market are increasingly
responsible for a greater share of their health care costs through
higher deductibles and shifts from copayments to coinsurance.\81\ The
final rules will give health care consumers and stakeholders
information vital to their roles in creating and supporting a
sustainable market-driven health care economy.
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\80\ See ``Medical Expenditure Panel Survey. Insurance Component
National-Level Summary Tables.'' United States Department for Health
and Human Services Agency for Healthcare Research and Quality.
Available at: https://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=1.
\81\ The preamble to the proposed rules contains a detailed
discussion regarding increases in deductibles. See 84 FR 65464,
65465 (Nov. 27, 2019) (citing Ray, M., Copeland, R., Cox, C.
``Tracking the rise in premium contributions and cost-sharing for
families with large employer coverage,'' Peterson-Kaiser Health
System Tracker. August 14, 2019. Available at: https://www.healthsystemtracker.org/brief/tracking-the-rise-in-premium-contributionsand-cost-sharing-for-families-with-large-employercoverage/.).
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[[Page 72171]]
The final rules also will provide critical information to consumers
who have satisfied their deductibles or reached their out-of-pocket
limit. These consumers may wish to base their health care spending
decisions on underlying prices to avoid excess spending by their issuer
or employer that could lead to premium increases, increased out-of-
pocket obligations, or lower employer contributions toward employer-
sponsored coverage. Knowing the rates negotiated by other issuers in
their geographic market will assist consumers during open enrollment,
as they search for a plan that may lower their out-of-pocket costs in
the coming year.
The government also has a substantial interest in assisting other
health care spenders, such as employers and government benefits
programs, to make coverage choices that drive value for the public.
Given the size and scope of the country's health care market and the
fact that choices made by employers and benefits programs operate at
scale to direct health care spending, the government can increase the
value of health care expenditures by ensuring those entities have
access to accurate information. Providing employers and government
benefit programs with actionable data may also help drive down total
health care spending, as issuers compete to offer higher-value
programs.
The government's interest in promoting a sustainable health care
economy driven by market forces is substantial, as reflected in section
1311(e) of PPACA. As of 2018, U.S. health care spending had reached
$3.6 trillion, or $11,172 per person and accounted for 17.7 percent of
the nation's Gross Domestic Product.\82\ Given the scope of the market
and the earlier-discussed data suggesting that price transparency and
market forces can drive down health care costs, the government's
interest in increasing price transparency is substantial.
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\82\ ``Historical National Health Expenditure Data.'' Centers
for Medicare and Medicare Services. Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.
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Each of the three interests identified above is furthered by the
final rules. For individuals, the data provided will permit them to
compare prices for health care items and services and allocate their
funds accordingly. For benefit plans and employers, the information
provided will guide decision-making about which coverage options to
offer, and which providers or third parties, like pharmacy benefit
managers (PBMs), to contract with. For the health care economy as a
whole, the Departments are of the view (based on available data) that
transparency and market forces will drive savings and reduce
expenditures. Accordingly, the Departments continue to hold the view
that the final rules serve substantial government interests.
Furthermore, the requirement to provide these disclosures does not
unduly burden plan or issuer speech because nothing in the final rules
would ``drown out [a plans' or issuers'] own message'' or ``effectively
rule out'' any mode of communication. See NIFLA, 138 S. Ct. at 2378.
Plans and issuers remain free to communicate with consumers using
methods and media they have always used or may choose to use in the
future.
The Departments further disagree that the final rules would be
subject to a standard of constitutional scrutiny higher than that
applied to compelled commercial speech. For First Amendment purposes,
commercial speech is speech ``related solely to the economic interests
of the speaker and its audience.'' Cent. Hudson Gas & Electric Corp. v.
Pub. Serv. Comm'n of N.Y., 447 U.S. 557, 561 (1980). Price information
concerning the cost of health services is related solely to the
economic interests of providers and the consumers who seek their
services. The speech in question here, therefore, is commercial speech.
Furthermore, the disclosure of negotiated rates is one concerning
``purely factual and uncontroversial information about the terms [i.e.,
the price] under which services are available.'' See Zauderer, 471 U.S.
at 651; see also Am. Meat Inst. v. U.S. Dept. of Agric., 760 F.3d 18,
27 (D.C. Cir. 2014). Therefore, the imposition on commercial speech by
the final rules need only be ``reasonably related'' to the government's
stated interest. For the reasons discussed above, the Departments are
of the view that making available negotiated rates to consumers is
reasonably related to the government's stated interests in providing
greater cost information to consumers and benefit plans, as well as
increasing price transparency in the health care market more broadly.
While the Departments disagree that the stricter constitutional
scrutiny under Central Hudson would apply to the final rules for the
reasons discussed above, the Departments also are of the view that the
government interests described above are ``substantial,'' and the
regulations, for the reasons described above, directly advance that
governmental interest and are not more extensive than necessary to
serve that interest. None of the alternatives considered by the
Departments would provide the full panoply of information necessary to
achieve the identified interests. Specifically, the only way to provide
information concerning a consumer's personal liability for health care
services when the negotiated rate is all or any portion of that
liability is by disclosing those rates.
The Departments disagree that the rules are excessively burdensome
and are invalid because they purportedly exceed the statute's goal of
providing notice of cost-sharing liability. The Departments are of the
view that, in addition to providing participants, beneficiaries, and
enrollees with notice of cost-sharing liability, the final rules are
intended to advance a number of concurrent goals, as described earlier
in this preamble. These goals are consistent with the full text of
section 1311(e)(3) of PPACA and section 2715A of the PHS Act. They
include the overarching goal of facilitating a market-driven heath care
system by giving consumers of health care services data that will
enable consumers to make fully informed, cost-conscious decisions when
choosing health care. These transparency requirements will support the
creation of a competitive dynamic in health care markets that leads to
narrower price differentials for the same services, fosters innovation,
and potentially lowers overall health care costs over time.\83\ These
goals are consistent with the statutory mandate to promote transparency
in coverage by making available to the public accurate and timely
health care information, including cost-sharing information, and other
information as deemed appropriate by the Departments.
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\83\ 84 FR 65465 (Nov. 27, 2019).
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The Departments also disagree with any notion that, because
published negotiated rates would not be useful to all consumers in all
situations, the final rules are not sufficiently tailored to survive
constitutional scrutiny. Consumers seeking in-network items or services
must have access to negotiated rate information to calculate out-of-
pocket costs under the majority of health care payment models. These
negotiated rates determine the price they will be obliged to pay, up to
the applicable out-of-pocket limit. Thus, disclosing the negotiated
rate is important to the consumer's ability to reasonably estimate his
or her personal financial liability in advance of receiving services.
In particular, and as explained earlier in this preamble, annual
deductibles for plans and issuers
[[Page 72172]]
now routinely obligate consumers to pay several thousand dollars before
the plan or issuer pays any benefits. The requirement to disclose
negotiated rates to consumers is, therefore, crucial to providing
meaningful transparency in health care markets.
b. Fifth Amendment Taking
The Departments also disagree that the requirement to disclose
negotiated rates in the final rules constitutes an unlawful taking
without just compensation under the Fifth Amendment. As an initial
matter, the subject of any ``taking'' is a cognizable property
interest. Commenters asserted that their negotiated rates constitute
property because they are trade secrets. The Departments disagree. In
order for a piece of information to qualify as a trade secret, it must
be the subject of efforts to maintain its secrecy that are reasonable
under the circumstances. Under most circumstances, if a piece of
information is disclosed to third parties who have no obligation to
keep it a secret, it does not qualify for trade secrets protection.
Negotiated rates for health care items and services are routinely
disclosed in EOBs provided to participants, beneficiaries, and
enrollees. Participants, beneficiaries, and enrollees have no
obligation to keep the information contained in their EOBs secret; some
patients provide them to journalists or upload them to crowd-sourcing
websites.\84\ The Departments are of the view that this routine
disclosure of negotiated rate information is sufficient to defeat any
asserted trade-secret protection, and, therefore, the issuers have no
proprietary interest in the negotiated rates that could be the subject
of a constitutional ``taking.''
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\84\ Kliff, S. ``Why I'm Obsessed With Patients' Medical Bills,
New York Times. August 7, 2020. Available at https://www.nytimes.com/2020/08/07/insider/coronavirus-medical-bills.html;
see also Cerullo, M. ``As medical costs soar, more Americans turn to
crowdfunding.'' CBS News. February 21, 2020. Available at: https://www.cbsnews.com/news/health-care-costs-crowdfunding-medical-bills/.
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Moreover, plans' and issuers' expectations of confidentiality in
information provided as a condition of participation in a highly
regulated industry (for example, health insurance) are substantially
diminished by the highly regulated nature of the industry. See, e.g.,
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1007 (1984) (noting that
expectations are necessarily adjusted in areas that ``ha[ve] long been
the source of public concern and the subject of government
regulation''); Me. Educ. Ass'n Benefits Trust v. Cioppa, 695 F.3d 145
(1st Cir. 2012) (discussing a Maine law requiring health issuers to
disclose loss information); Franklin Mem'l Hosp. v. Harvey, 575 F.3d
121, 128 (1st Cir. 2009) (holding that a claimant's investment-backed
expectations were ``tempered by the fact that it operate[d] in the
highly regulated hospital industry'').\85\ Plans and issuers are
already subject to extensive regulation under Federal and state law. As
noted by the 1st Circuit in Pharmacy Care v. Rowe:
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\85\ PBMs serve as intermediaries between pharmacies and health
benefit plans, including plans covered by ERISA. PBMs contract with
pharmacies to establish pharmacy networks and contract with health
benefit plans to provide access to those pharmacy networks. When a
participant in a health benefit plan fills a drug prescription at a
network pharmacy, the PBM pays the pharmacy at the rate negotiated
in the contract between the PBM and the pharmacy (less any copayment
by the participant), and the health benefit plan then reimburses the
PBM at the rate negotiated in the contract between the PBM and the
health benefit plan.
If [regulated parties] truly assumed that they would be free
from disclosure requirements . . . this would be more wishful
thinking than reasonable expectation. Whether or not the law strikes
the right economic balance between competing producer and consumer
interests, it is no more a taking than the requirement that public
corporations disclose private corporate information about financial
---------------------------------------------------------------------------
prospects to the public through regular SEC filings.
Pharm. Care Mgmt. Ass'n v. Rowe, 429 F.3d 294, 316 (1st Cir. 2005)
(joint concurring opinion representing the opinion of the court). The
Court further stated: ``Given the absence of a full-scale taking and
the presence of a traditional regulatory interest, it is enough to
defeat the takings claim that no reasonable investment-backed
expectation is present at all.'' Id. at 315; see also Good v. United
States, 189 F.3d 1355, 1363 (Fed. Cir. 1999) (``We have previously held
that the government is entitled to summary judgment on a regulatory
takings claim where the plaintiffs lacked reasonable, investment-backed
expectations. . . .'').
Even if there were some property interest in negotiated rates, the
Departments are of the view that this regulation is not a taking. The
Supreme Court ``has identified several factors that should be taken
into account when determining whether a governmental action has gone
beyond `regulation' and effects a `taking.' '' Monsanto, 467 U.S. at
1005. Among those factors are ``the character of the governmental
action, its economic impact, and its interference with reasonable
investment-backed expectations.'' Id. (citing PruneYard Shopping Ctr.
v. Robins, 447 U.S. 74, 83 (1980)); see also Kaiser Aetna v. United
States, 444 U.S. 164, 175 (1979); Penn Cent. Transp. Co. v. City of
N.Y., 438 U.S. 104, 124 (1978).
In requiring disclosure under the final rules, the government does
not do so with the intention that the information is primarily and
explicitly for the government's own use, or that any such potential
impact is the purpose for requiring the disclosure. Instead, the final
rules are intended to, and will, enable consumers to access information
needed to make informed decisions on health care services. Under Penn
Central, ``[a] `taking' may more readily be found when the interference
with property can be characterized as a physical invasion by government
than when interference arises from some public program adjusting the
benefits and burdens of economic life to promote the common good.''
Penn Central, 438 U.S. at 124 (citation omitted). The final rules
clearly fall on the other end of the spectrum, arising from statutory
provisions, section 1311(e)(3) of PPACA and section 2175A of the PHS
Act, that ``adjust[t] the benefits and burdens of economic life to
promote the common good.'' Connolly v. Pension Benefit Guar. Corp., 475
U.S. 211, 212 (1986).
3. Protections for Proprietary, Confidential Business Information, and
Trade Secrets
Several commenters objected to the proposed rules on grounds that
the requirement that issuers make public negotiated rates with
providers would require the disclosure of allegedly confidential,
proprietary business information, and trade secrets that are expressly
protected from disclosure by a variety of Federal and state laws, and
the statute does not in any way purport to abrogate those protections.
Several commenters pointed to the Defend Trade Secrets Act (DTSA),
which protects the property rights of trade secret holders,\86\ and the
Freedom of Information Act (FOIA),\87\ which protects confidential,
proprietary business information, and trade secrets from public
disclosure, as examples of Congress' intent that such information be
protected.
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\86\ 18 U.S.C. 1836(b).
\87\ 5 U.S.C. 552.
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The Departments disagree. As discussed above, the Departments are
of the view that the routine disclosure of negotiated rate information
to third parties via EOBs means that the rate information is not a
trade secret, and the DTSA, therefore, does not apply. Even if it did,
there can be no meaningful sense in which the disclosure of this
information pursuant to the final rules would constitute a
misappropriation by
[[Page 72173]]
improper means prohibited by the DTSA. The disclosures in question
would be made pursuant to a regulatory mandate authorized by law, to
effectuate policy priorities enacted by Congress: Namely, transparency
in health care. These disclosures cannot reasonably be construed as
``theft, bribery, or misrepresentation.'' \88\
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\88\ 18 U.S.C. 1839(5)-(6).
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The disclosures required under the final rules would also not
constitute a breach or inducement of a breach of a duty to maintain
secrecy, as the final rules apply prospectively in a regulatory
environment in which all parties to provider agreements, and all
affected plans and issuers, are being placed on notice and should be
aware in advance of the requirements of the final rules. All parties to
these contracts are therefore positioned to modify contractual
arrangements, or similar policies, practices, or expectations relating
to privacy or trade secrets to conform to the final rules. Otherwise,
the final rules will supersede these arrangements to the extent
necessary to implement these rules.
FOIA is also not relevant to the disclosure that would be required
by the final rules.\89\ FOIA is a public information law that applies
to Federal agencies, and generally enables the public to obtain records
in possession of an agency.\90\ Under the final rules, by contrast,
negotiated rate information and out-of-network allowed amount
information would be made available for the express purpose of making
the information broadly available to the public, consistent with the
authority Congress vested in the Departments. FOIA does not apply to
disclosures by private entities such as the plans and issuers that
would be subject to the disclosure requirements in the final rules. The
exemptions found in the FOIA statute apply to disclosures by the
government; that a piece of information might be subject to a FOIA
exemption does not mean it is entitled to a heightened protection from
disclosure when held by a private party.
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\89\ 5 U.S.C. 552.
\90\ 5 U.S.C. 552(b)(4).
---------------------------------------------------------------------------
Neither does FOIA apply to information maintained by private
entities and not by an agency or government contractor, as that
information would not constitute an agency record. To be an agency
record subject to FOIA, an agency must have created or obtained the
materials and must be in control of the materials. U.S. Dep't of
Justice v. Tax Analysts, 492 U.S. 136, 145 (1989). Regardless of
whether the negotiated rates and allowed amounts would constitute trade
secrets or commercial information under FOIA, a requirement that
private entities make certain information public does not implicate
FOIA.
One commenter contended that the proposed disclosure of negotiated
rates does not concern trade secrets, and is therefore not prohibited
for that reason. The commenter asserted that the proposed disclosures
concern end prices, which are comparable to the ``sticker price'' of a
medical service or device. The commenter stated that those prices are
not themselves trade secrets, which the commenter contended consist of
negotiating tactics which the proposed rules would not require issuers
to make available to the public. As indicated above in relation to the
DTSA, the Departments agree that the final rules do not implicate trade
secrets.
In support of the proposition that Congress could not have intended
to undermine existing protections for confidential or proprietary
business information and trade secrets when it enacted section
1311(e)(3) of PPACA, one commenter noted that elsewhere in PPACA, where
Congress mandated pricing-related disclosures, it included language or
arrangements that protected individual negotiated rates and pricing
information from disclosure. A provision relating to the disclosure of
drug cost information mandates release of only aggregated information
and includes a specific designation of the information as confidential
and protected from publication except in specific formats and for
limited purposes that protect the identity of the parties to particular
pricing arrangements.\91\ Another provision mandates that hospitals
make public a list of standard charges for items and services, not
negotiated rates, on an annual basis only.\92\ Both of these
provisions, the commenter suggested, indicate Congressional intent to
protect proprietary business information that is contrary to the
requirements of the proposed rule.
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\91\ 42 U.S.C. 1320b-23(c).
\92\ 42 U.S.C. 300gg(18)(e).
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The Departments are aware that Congress included provisions
preventing or limiting disclosures of health care information in other
sections of PPACA but note that Congress did not include such
provisions in section 1311(e)(3)(A) of PPACA, indicating no intention
that such restrictions apply in this context.\93\
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\93\ See, for example, Keene Corp. v. United States, 508 U.S.
200, 208 (1993) (``[W]here Congress includes particular language in
one section of a statute but omits it in another . . . it is
generally presumed that Congress acts intentionally and purposely in
the disparate inclusion or exclusion.'').
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Several commenters also pointed to the Sherman Antitrust Act, and
specific applications of antitrust principles relating to the
disclosure of trade secrets, including negotiated rates between issuers
and providers in the health care context. They contend that Congress
could not have intended to indirectly undermine these long-standing
standards and policies when it enacted section 1311(e)(3) of PPACA.
Several commenters also cited interpretive communications and similar
guidance from the Federal Trade Commission (FTC) and the Antitrust
Division of the Department of Justice for the proposition that public
disclosure of negotiated prices can have anticompetitive effects and
harm consumers, contrary to long standing principles of antitrust law.
One commenter recommended that any plan to make public privately
negotiated rates should include requirements to aggregate information
to ensure that arrangements of specific market participants remain
confidential, and that a time lag also should be applied to any
released data to ensure current information is not compromised.
The Departments disagree with the notion that the final rules will
lead to anticompetitive behavior by plans, issuers, and providers. The
Sherman Antitrust Act prohibits any contract, combination, or
conspiracy in restraint of trade or commerce.\94\ Specifically, the law
prohibits any ``person'' from entering into any such contract, trust,
or similar arrangement.\95\ ``The primary purpose of the antitrust laws
is to protect interbrand competition.'' State Oil Co. v. Khan, 522 U.S.
3, 15 (1997) (citing Bus. Elec. Corp. v. Sharp Elec. Corp., 485 U.S.
717, 726 (1988)). The Departments are not of the view that publication
of plans' and issuers' negotiated rates with providers is likely to
spur plans and issuers (``persons'') to violate the law by colluding to
fix their prices in a manner that restrains trade. Rather, while the
publication of price information sometimes facilitates tacit collusion,
based on public comments and the many empirical studies that have
investigated the impact of price transparency on other, non-health care
markets, the Departments are of the
[[Page 72174]]
view that transparency of negotiated rates will likely motivate plans,
issuers, and providers to reassess the competitiveness of their prices
in order to continue to successfully compete with lower premiums,
deductibles, and other cost-sharing responsibilities, and lower priced
health care items and services. As stated in the preamble of the
Hospital Price Transparency Final Rule, many empirical studies have
investigated the impact of price transparency on markets, with most
research, consistent with predictions of standard economic theory,
showing that price transparency leads to lower and more uniform
prices.\96\ Traditional economic analysis suggests that if consumers
were to have better pricing information for health care services,
providers would face pressure to lower prices and provide better
quality care. Falling prices may, in turn, expand consumers' access to
health care.\97\
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\94\ 15 U.S.C. 1.
\95\ Id. ``Person'' or ``persons'' are defined at 15 U.S.C.
12(a) (``[P]erson'' or ``persons'' wherever used in this Act shall
be deemed to include corporations and associations existing under or
authorized by the laws of either the United States, the laws of any
of the Territories, the laws of any State, or the laws of any
foreign country'').
\96\ 84 FR 65464, 65524 (Nov. 27, 2019).
\97\ Austin, A. D., and Gravelle, J. G. ``Congressional Research
Service Report for Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in Other Markets for
the Healthcare Sector''. April 29, 2008. Available at: https://crsreports.congress.gov/product/pdf/RL/RL34101.
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By disclosing negotiated rates, the Departments are of the view
that the public (including patients, employers, clinicians, and other
third parties) will have the information necessary to make more
informed decisions about their care. The Departments expect that the
impact of more expansive transparency in pricing information will
increase market competition and may ultimately drive down the cost of
health care services, making care more affordable for all consumers.
Although the Departments appreciate that regulated entities could
seek to engage in unlawful behavior in restraint of trade, antitrust
law does not proscribe or limit action by the Federal Government to
address chronic issues in the nation's health care markets. Such
actions include new, innovative measures that, based on evidence and
research, are likely to improve competition and lower costs to
consumers. The Departments also are of the view that the statute and
the final rules do not constitute an abrogation of antitrust law.
Nothing under the final rules creates, compels, or endorses agreements
or conspiracies between or among persons to form illegal arrangements
or trusts in restraint of trade or commerce. To the contrary, antitrust
law enforcement remains an important tool to protect these markets from
anticompetitive behavior.
The Departments are of the view that the disclosure of negotiated
rates would serve a greater public interest and that ``concealing
negotiated price information serves little purpose other than
protecting dominant providers' ability to charge above-market prices. .
. .'' \98\ For example, in Maine, one state official indicated that
``to date, there is no evidence that the release of [Maine Health Data
Organization] claims data has resulted in an anticompetitive market.
Similarly, disclosure of claims data in New Hampshire has resulted
increased competition and reduced prices for health care.\99\
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\98\ Catalyst for Payment Reform. ``Report Card on State Price
Transparency Laws.'' July 2015. Available at: https://www.catalyze.org/wp-content/uploads/woocommerce_uploads/2017/04/2015-Report-Card-on-State-Price-Transparency-Laws.pdf.
\99\ Brown Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 101 Rev. of Econ. & Stat. 699 (2019). Available at:
http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
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For the reasons set forth in this preamble, the Departments are of
the view that the final rules will enhance competition, improve
markets, and benefit all consumers of health care, including
individuals, employers, and government health care programs. Under the
final rules, disclosure of the negotiated rate is critical to the
ability of consumers, including those who have not met their annual
deductible obligation, to be able to reasonably estimate in advance
their personal liability for covered services from participating
providers. It is also critical in estimating coinsurance liabilities
that are calculated as a percentage of provider charges. In addition,
the Departments are of the view that accessible pricing information
improves market efficiency.\100\
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\100\ Austin, D.A., and Gravelle, J.G. ``CRS Report for
Congress: Does Price Transparency Improve Market Efficiency?
Implications of Empirical Evidence in Other Markets for the
Healthcare Sector.'' July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
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4. Administrative Procedure Act (APA) and Arbitrary and Capricious
Agency Action
Some commenters asserted that the proposed rules were arbitrary and
capricious and thus violate the APA. Two commenters contended that the
Departments' rationale is entirely speculative. They also contended
that the Departments have not quantified in a reliable way the costs or
anticipated benefits of the proposed rules, examined relevant data, or
articulated a satisfactory explanation for the proposed rules. One
commenter held the opposite position and asserted that the proposed
rules were fully consonant with APA requirements. The commenter
believed the Departments are implementing PPACA appropriately, and that
the interpretation of the authorities underlying the proposed rules was
reasonable and rationally explained by the Departments.
The Departments are also of the view that the final rules are
consistent with the APA. Section 1311(e)(3) of PPACA and section 2715A
of the PHS Act are designed to assist consumers by enhancing their
ability to make cost-conscious decisions, which is essential to
establish and maintain the level of market competition necessary to
ensure that health care costs are rational, reasonable, and governed by
standard market discipline. As the preamble to the proposed rules
observed, there is substantial evidence that increased price
transparency improves market efficiency.\101\ For these reasons, it is
within the scope of the statute to assist consumers with selecting
providers, evaluating market options, increasing competition, and
reducing market disparities. The carefully targeted information is
essential to the goals of price transparency, and there is no other
means of making cost-sharing liability information available to
consumers whose personal liability is determined in whole or in part by
reference to negotiated rates or allowed amounts. The Departments
further hold the view that the Departments have made reasonable efforts
to quantify all aspects of the final rules, and their potential
effects, for which data is available. The Departments also note that
efforts have been made to qualitatively address those areas where the
Departments are unable to adequately derive quantitative assessments.
Responses to additional comments are discussed later in the Regulatory
Impact Analysis (RIA) and Regulatory Alternatives Considered sections
of this preamble.
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\101\ 84 FR 65464, 65489; 65495 (Nov. 27, 2019); see also
Austin, A.D., and Gravelle, J.G. ``Congressional Research Service
Report to Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in Other Markets for
the Healthcare Sector.'' July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf; see also Brown, Z.Y.
``Equilibrium Effects of Health Care Price Information.'' 100 Rev.
Econ. & Stat. 1. Available at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Enthoven, A.
``Market Forces and Efficient Health Care Systems.'' Health Affairs,
Vol. 23, No. 2. Available at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.25.
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This preamble (as well as the preamble to the proposed rules) cites
substantial research indicating that increased price transparency
increases competition and lowers costs, leads to
[[Page 72175]]
more uniform pricing within markets, and increases overall market
efficiency.\102\ This preamble also cites an abundance of evidence
indicating that industry and other stakeholders believe that increased
price transparency will enhance competition and benefit consumers. As
stated earlier in this preamble in relation to comments regarding the
First Amendment, the information the final rules require to be
disclosed is clearly identified and has a direct nexus to the
government's legitimate and substantial interest in ensuring that
consumers have sufficient information to calculate out of pocket costs
for health care items and services and ultimately assess whether the
payment terms of plans and coverages are fair, reasonable, or
advantageous to the consumer. Furthermore, in the Impact Estimates of
the Transparency in Coverage Provisions and Accounting Table section
later in this preamble, the Departments identify ranges of relevant
factors and categories of information that the Departments have
attempted to quantify, as well as those factors and categories that the
Departments cannot quantify at this time. Nevertheless, the Departments
are of the view that those determinations are reasonable and
sufficiently thorough, and that the Departments' expectations regarding
the impacts of the final rules are not speculative.
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\102\ 84 FR 65464, 65466-67 (Nov. 27, 2019).
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5. Other Legal Concerns
Several commenters asserted that requiring issuers to make
negotiated prices public could violate various state laws, principles
of common law, and tort laws concerned with the protection of trade
secrets and proprietary business information. Several commenters
specifically stated that the proposal would violate the Uniform Trade
Secrets Act (UTSA) \103\ as adopted by several states.
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\103\ The Uniform Trade Secrets Act is a model statute that a
majority of states have adopted in some form. The UTSA is
promulgated by the Uniform Law Commission. See generally, Uniform
Trade Secrets Act with 1985 Amendments, Nat'l Conference of
Commissioners on Uniform State Laws, August 1985. UTSA has been
adopted in some form by 48 states. New York and North Carolina are
the exceptions. See ``Trade Secrets Act.'' Uniform Laws Commission.
Available at: https://www.uniformlaws.org/committees/community-home?CommunityKey=3a2538fb-e030-4e2d-a9e2-90373dc05792.
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The Departments understand these concerns and appreciate that
States have passed laws and regulations that may address the same or
similar information the final rules require to be publicly disclosed,
or disclosed to participants, beneficiaries, or enrollees. The final
rules will preempt these laws, to the extent they conflict with Federal
law and would prevent application of Federal requirements, as required
under section 1321(d) of PPACA and section 2724(a) of the PHS Act. The
Departments discuss this issue in more detail later in this preamble in
the context of addressing federalism considerations.
Moreover, the Departments are also of the view that negotiated
rates do not constitute trade secrets as defined under the UTSA and
under principles of tort law. A trade secret under the UTSA is
``information, including a formula, pattern, compilation, program,
device, method, technique, or process'' that ``derives independent
economic value. . . from not being generally known [or] readily
ascertainable by proper means by . . . other persons who can obtain
economic value from its disclosure [and] is the subject of efforts to .
. . maintain its secrecy.'' \104\ Critically, and as discussed earlier,
negotiated rates are routinely disclosed to beneficiaries in EOBs.
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\104\ See Uniform Trade Secrets Act with 1985 Amendments, Nat'l
Conference of Commissioners on Uniform State Laws, August, 1985;
Restatement (First) of Torts section 757 (1939).
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To the extent the final rules require disclosure of trade secrets,
the activity that supports a cause of action under tort law includes
obtaining the information by improper means or a breach of
confidence.\105\ No such scenario is implicated where the disclosure is
made pursuant to a regulatory mandate authorized by statute. In this
context, the disclosure is a legal obligation, and so the disclosure is
by definition proper and made in the absence of any duty of confidence.
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\105\ Restatement (First) of Torts section 757 (1939) (``GENERAL
PRINCIPLE. One who discloses or uses another's trade secret, without
a privilege to do so, is liable to the other if (a) he discovered
the secret by improper means, or (b) his disclosure or use
constitutes a breach of confidence reposed in him by the other in
disclosing the secret to him, or (c) he learned the secret from a
third person with notice of the facts that it was a secret and that
the third person discovered it by improper means or that the third
person's disclosure of it was otherwise a breach of his duty to the
other, or (d) he learned the secret with notice of the facts that it
was a secret and that its disclosure was made to him by mistake.'').
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Finally, even if negotiated rates could constitute trade secrets
under a state's law, state law cannot invalidate the authority Congress
granted to the Departments under section 1311(e)(3) of PPACA to require
disclosure of negotiated rates and other information that the
Departments determine appropriate to create a level of transparency in
coverage sufficient to address chronic issues in American health care
markets, including rising health care prices.
Several commenters asserted that making negotiated rates public
would violate contractual arrangements between virtually all issuers
and providers, in particular contractual provisions that prohibit
disclosure of negotiated rates. One commenter noted that this would, at
a minimum, require a considerable effort to amend many existing
contracts.
The Departments understand that changes in applicable laws and
regulations may necessitate changes to certain business and contractual
relationships over time. The Departments are of the view, however, that
the final rules are necessary to advance the interests of consumers and
to fulfill the goals of the relevant statutes. The Departments also
anticipate that in most cases, affected contracts include clauses that
specifically anticipate the possibility of future changes to applicable
law or regulations. Additionally, even if a contract between a provider
and a payer includes a provision prohibiting the public disclosure of
its terms, it is the Departments' understanding that such contracts
typically include exceptions if a particular disclosure is required by
Federal law. Finally, as the Supreme Court has found, ``[c]ontracts,
however express, cannot fetter the constitutional authority of
Congress. Contracts may create rights of property, but when contracts
deal with a subject matter which lies within the control of Congress,
they have a congenital infirmity. Parties cannot remove their
transactions from the reach of dominant constitutional power by making
contracts about them.'' Norman v. Balt. & Ohio R.R. Co., 294 U.S. 240,
307-08 (1935) (``If the regulatory statute is otherwise within the
powers of Congress . . . its application may not be defeated by private
contractual provisions.''); see also Connolly, 475 U.S. at 224.
Several commenters contended that the proposed rules would be
inconsistent with certain Executive orders. One commenter contended
that Executive Order 13877, which the Departments cited as the impetus
for the proposed rules, directs the agencies to ``require . . . health
insurance issuers . . . to provide or facilitate access to information
about expected out-of-pocket costs for items or services to patients
before they receive care.'' The commenter asserted that this directive
does not rationally encompass a requirement that issuers make public
all negotiated rates and allowed amounts.
[[Page 72176]]
The commenter also asserted that the proposed rules are incompatible
with section 3(b) of Executive Order 13877, which provides that any
rulemaking be ``consistent with applicable law,'' in that the proposed
rules run contrary to antitrust law as well as prohibitions against
disclosing trade secrets.
The Departments disagree with these comments. First, Executive
Order 13877 clearly states that it is ``not intended to, and does not,
create any right or benefit, substantive or procedural, enforceable at
law or in equity by any party against the United States, its
departments, agencies, or entities, its officers, employees, or agents,
or any other person.'' Executive Order 13877, Sec. 8(c). Thus, an
Executive order cannot form the basis of a challenge to a rulemaking.
Second, for all the reasons detailed earlier in this preamble, the
Departments are of the view that the final rules are necessary and
appropriate measures that are sufficiently narrowly tailored to meet
the stated goals of the Executive order. Making public the negotiated
rates and out-of-network allowed amounts is essential for consumers to
obtain useful information about out-of-pocket costs they are likely to
incur before receiving services. Due to the prevalence of high
deductibles throughout markets nationwide, this information will be
crucial for a significant cohort of persons enrolled in health plans to
be able to anticipate costs in advance of each plan year. For the
public, access to information concerning allowed amounts is essential
to obtain reliable advance estimates of personal liability to
facilitate cost-conscious choices that enhance competition and lower
overall costs. Finally, as described later in this preamble, the
Departments considered many alternatives to the proposed and final
rules. The Departments are of the view that the final rules are a
straightforward implementation of the mandate of section 1311(e)(3) of
PPACA, and that the choices taken in particular instances are well
calculated to effectively and fully implement the goals of the
authorizing statutes. Moreover, the regulations provide tools and
information to consumers that are critical to their ability to access
meaningful price information, including the personal liability
associated with a substantial portion of health care services. This
directly facilitates the meaningful engagement of consumers with their
own health care and protects patients from the likelihood of
unanticipated health care costs. As such, the regulations fulfill the
mandate of Executive Order 13877.
For the foregoing reasons, the final rules adopt the majority of
the provisions in the proposed rules, with certain modifications, as
described in detail in the following sections of this preamble.
II. Overview of the Final Rules Regarding Transparency--the Departments
of the Treasury, Labor, and Health and Human Services
The Departments are finalizing price transparency requirements set
forth in the final rules in 26 CFR 54.9815-2715A1, 54.9815-2715A2, and
54.9815-2715A3, 29 CFR 2590.715-2715A1, 2590.715-2715A2, and 2590.715-
2715A3, and 45 CFR 147.210, 147.211, and 147.212. The final rules
separate the proposed regulations all contained in 26 CFR 54.9815-
2715A, 29 CFR 2590.715-2715A, and 45 CFR 147.210, into three separate
regulations for each of the Departments. The regulations set forth the
scope and relevant definitions in 26 CFR 54.9815-2715A1, 29 CFR
2590.715-2715A1, and 45 CFR 147.210 (which correspond with paragraph
(a) of the proposed regulations). The regulations at 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and, 45 CFR 147.211 (which correspond
with paragraph (b) of the proposed regulations) include: (1) A
requirement that group health plans and health insurance issuers in the
individual and group markets disclose to participants, beneficiaries,
or enrollees upon request, through a self-service tool made available
by the plan or issuer on an internet website, cost-sharing information
for a covered item or service from a particular provider or providers,
and (2) a requirement that plans and issuers make such information
available in paper form, upon request. As explained in more detail
later in this preamble, the final rules adopt a three-year, phased-in
approach with respect to the scope of the requirement to disclose cost-
sharing information. Plans and issuers must make cost-sharing
information available for 500 items and services identified by the
Departments for plan years (in the individual market, for policy years)
beginning on or after January 1, 2023, and must make cost-sharing
information available for all items and services for plan years (in the
individual market, for policy years) beginning on or after January 1,
2024.
The regulations at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3,
and 45 CFR 147.212 (at paragraph (c) of the proposed regulations)
require that plans and issuers disclose pricing information to the
public through three machine-readable files. One file requires
disclosure of payment rates negotiated between plans or issuers and
providers for all covered items and services. The second file will
disclose the unique amounts a plan or issuer allowed, as well as
associated billed charges, for covered items or services furnished by
out-of-network providers during a specified time period. To reduce the
complexity and burden of including prescription drug information in the
negotiated rate machine-readable file, the final rules require a third
file that will include pricing information for prescription drugs. The
final rules modify the applicability date for these provisions to plan
years (in the individual market, policy years) beginning on or after
January 1, 2022.
The provisions proposed at paragraph (d) of the proposed
regulations are finalized in 26 CFR 54.9815-2715A2 and 54.9815-2715A3,
29 CFR 2590.715-2715A2 and 2590.715-2715A3, and 45 CFR 147.211 and
147.212 with non-substantive editorial changes for increased
readability, and with effective dates reflecting the phased approach to
implementation mentioned earlier and discussed in more detail later in
this preamble.
In addition to splitting the final rules into three separate
regulations for each Department, the Departments have added
severability clauses to the final rules to emphasize the Departments'
intent that, to the extent a reviewing court holds that any provision
of the final rules is unlawful, the remaining rules should take effect
and be given the maximum effect permitted by law. The final rules
provide that any provision held to be invalid or unenforceable by its
terms, or as applied to any person or circumstance, or stayed pending
further agency action, shall be severable from the relevant section and
shall not affect the remainder thereof or the application of the
provision to persons not similarly situated or to dissimilar
circumstances.
To streamline the final rules, the Departments have removed
definitions of terms that are defined in the applicable statute or
elsewhere in such statutes' implementing regulations and have revised
certain definitions to provide more clarity. Finally, based on comments
received, the Departments have reassessed the associated burden
estimates in the Economic Impact Analysis and Paperwork Burden section
of this preamble.
A. Definitions
The final regulations at 26 CFR 54.9815-2715A1(a), 29 CFR 2590.715-
2715A1(a), and 45 CFR 147.210(a) (paragraph (a) of the proposed
regulations) set forth definitions that are applicable to the
regulations at 26 CFR 54.9815-2715A2, 29 CFR 2590.715-
[[Page 72177]]
2715A2, and 45 CFR 147.211 (paragraph (b) of the proposed regulations)
and 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, 45 CFR 147.212
(paragraph (c) of the proposed regulations). The Departments have
revised the proposed definitions of some terms and included new defined
terms in order to clarify the final requirements of 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and 45 CFR 147.211, and 26 CFR 54.9815-
2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212. Comments on the
definitions in the proposed rule focused on concerns regarding
consistency of definitions across related government programs, the
general need for increased clarity in relation to some proposed
definitions, and the need for resolution of perceived ambiguities in
the proposed definitions. In response to these comments, the
Departments are not finalizing certain proposed definitions that are
already defined in existing, pertinent regulations. The Departments are
finalizing revised versions of other proposed definitions to clarify
their meaning, as well as the policies and requirements adopted in the
final rules.
Commenters recommended aligning definitions in the proposed
regulations with those in other existing regulations to avoid
conflicts. In light of these recommendations, the Departments are not
finalizing the proposed definition of ``participant'' under 26 CFR
54.9815-2715A1, 29 CFR 2590.715-2715A1, or 45 CFR 147.210 because the
term is already defined in the Departments' regulations at 26 CFR
54.9801-2, 29 CFR 2590.701-2, and 45 CFR 144.103. Likewise, the
Departments are not finalizing the proposed definition of
``beneficiary'' under proposed 45 CFR 145.210 and 29 CFR 2590.715-
2715A1, because the term is already defined under HHS regulation at 45
CFR 144.103 and in statute at ERISA section 3(8). The Departments,
however, are finalizing the definition of ``beneficiary'' proposed
under 26 CFR 54.9815-2715A(a) (now at 26 CFR 54.9815-2715A1), because
the term is not otherwise defined in Treasury Regulations or the Code.
Finally, the Departments are not finalizing the proposed definition for
``qualified health plan'' at 45 CFR 145.210 since the term is not used
in the regulation text.
Some commenters requested clarification of the terms
``participants'' and ``beneficiaries'' because the proposed rules'
definitions of these terms included individuals who may become eligible
for a plan or coverage, and as the proposed rules envisioned
personalized feedback to ``participants'' and ``enrollees'' it would be
impossible to provide such information to an individual not currently
enrolled in a plan or coverage. The Departments agree. However, instead
of modifying existing, applicable definitions for ``participants'' and
``beneficiaries,'' the final rules, at 26 CFR 54.9815-2715A2, 29 CFR
2590.715-2715A2, and 45 CFR 147.211, and this preamble below clarify to
whom these disclosures are required.
One commenter recommended the Departments define the term ``in-
network provider'' in the final rules to clearly exclude device
suppliers and manufacturers that, the commenter suggested, have not
traditionally been considered in-network providers and whose price
information is of limited value to consumers. The Departments do not
agree that device suppliers and manufacturers should be excluded. Based
on the numerous public comments from individuals who support broad
price transparency for all covered items and services, the Departments
are of the view that pricing information for all covered items and
services should be available, including pricing for durable medical
equipment (DME) or other medical devices that are supplied to a
participant, beneficiary, or enrollee by a provider under a contract
with a plan or issuer. To clarify, the final rules define in-network
provider to mean any provider of items and services with which the plan
or issuer, or a third-party for a plan or issuer, has a contract
setting forth the terms under which a covered item or service may be
provided to a participant, beneficiary, or enrollee. The Departments
broadened this definition to clarify that even where a provider and a
plan or issuer have a limited rate agreement of some kind, or a rate
agreement covering DME, those providers should be considered in-network
providers for purposes of the final rules. Additionally, if a plan or
issuer enters into a contract or has such payment arrangements, then
the pricing information for the specific covered items or services
subject to that contract or payment arrangement are required to be
disclosed as part of the internet self-service tool and machine-
readable files.
The proposed regulations included a definition for ``negotiated
rate'' to mean the amount a group health plan or health insurance
issuer, or a third party on behalf of a plan or issuer, has
contractually agreed to pay an in-network provider for covered items
and services, pursuant to the terms of an agreement between the
provider and the plan or issuer, or a third-party on behalf of a plan
or issuer. Consistent with the proposed and final definitions of
``items and services,'' plans and issuers are required to disclose
``negotiated rates'' for encounters, procedures, medical tests,
supplies, prescription drugs, durable medical equipment, and fees
(including facility fees) to participants, beneficiaries, and enrollees
through the internet-based self-service tool (and in paper form) as
well as to the public through a machine-readable file. One commenter
requested the Departments clarify the meaning of ``negotiated rate''
for prescription drugs, noting that they assumed the Departments
expected plans and issuers to provide the drug price negotiated by a
PBM on behalf of the plan. Another commenter asserted that the
``negotiated rate'' of prescription drugs for disclosure should be the
price patients will see at the point-of-sale, meaning the undiscounted
price of the drug, plus dispensing fees. Conversely, another commenter
stated that dispensing fees are not paid by enrollees or used in
determining cost-sharing liability. Other commenters suggested that the
Departments grant plans and issuers flexibility in determining the
appropriate rate for disclosure, as plans and issuers use a variety of
different benchmarks, such as the Average Wholesale Price (AWP), or
Wholesale Acquisition Cost (WAC) which may be considered as the
``negotiated rate'' for the purpose of determining cost-sharing
liability under the plan or coverage.
In the final rules, the Departments have revised the definition of
``negotiated rate'' to mean the amount a plan or issuer has
contractually agreed to pay for a covered item or service, whether
directly or indirectly through a third party administrator (TPA) or
PBM, to an in-network provider, including an in-network pharmacy or
other prescription drug dispenser, for covered items or services. The
final rules adopt the proposed definition with two key modifications.
First, the term ``third party'' from the proposed definition is
expanded in the final rules to explicitly refer to ``third-party
administrator or pharmacy benefit manager.'' Second, the final
definition of ``negotiated rate'' specifically notes that the term in-
network provider includes an in-network pharmacy or other prescription
drug dispenser. The purpose of these modifications is to confirm the
commenter's inference that in the case of prescription drugs, the plan
or issuer should include the price negotiated for that plan or issuer
by a PBM. Furthermore, the ``negotiated rate'' in the final rules is
intended to be broad enough to account for different plan
[[Page 72178]]
designs and benchmarks for determining negotiated rates.
The final rules also add definitions for the following terms that
were not included in the proposed regulations: ``billed charge,''
``copayment assistance,'' ``derived amount,'' ``historic net price,''
``national drug code,'' and ``underlying fee schedule.'' The addition
of these definitions is discussed later in this preamble.
One commenter noted that the Departments have proposed definitions
for ``accumulated amounts,'' ``cost-sharing liability,'' and ``cost-
sharing information'' that are unique to the proposed rules and, in
some cases, differ from definitions of similar terms used in other
related regulations. In particular, this commenter recommended that all
definitions should explicitly recognize that cost sharing can be paid
by or on behalf of an enrollee, participant, or beneficiary, since that
is how cost sharing is defined by HHS regulation. The commenter also
requested that the Departments clarify the proposed definition of
``accumulated amounts'' and suggested revising the definition to state
clearly that accumulated amounts are the ``amount of financial
responsibility a participant, beneficiary, or enrollee has incurred,
whether satisfied by or on behalf of the participant, beneficiary, or
enrollee. . . .''
The Departments recognize that cost sharing may be paid by a third-
party on behalf of an enrollee, participant, or beneficiary. However,
the Departments are of the view that some plans and issuers do not
count cost-sharing liability payments made by a third-party towards a
participant's, beneficiary's, or enrollee's accumulated amounts, and
modifying the definitions as suggested by the commenter could cause
confusion in the context of the final rules.
The Departments have added disclosure requirements that are
discussed in detail elsewhere in this preamble to address this concern.
The definitions being finalized also include non-substantive editorial
changes from the proposed regulations for readability to the following
terms; ``accumulated amounts,'' ``billing code,'' ``bundled payment
arrangement,'' ``cost-sharing liability,'' ``cost-sharing
information,'' ``covered items or services,'' ``item or services,'' and
``out-of-network allowed amount.''
The definitions identified as new or substantively modified in this
section, as well as those that are being finalized as proposed, are
discussed further in relation to the requirements of 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and 45 CFR 147.211 and 26 CFR 54.9815-
2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212 throughout this
preamble.
B. Requirements for Disclosing Cost-Sharing Information to
Participants, Beneficiaries, and Enrollees
The final rules are intended to enable participants, beneficiaries,
and enrollees to obtain an estimate of their potential cost-sharing
liability for covered items and services they might receive from a
particular health care provider, consistent with the requirements of
section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA.
Accordingly, the Departments proposed in paragraph (b) of the proposed
regulations to require group health plans and health insurance issuers
to disclose certain information relevant to a determination of a
consumer's out-of-pocket costs for a particular health care item or
service in accordance with specific method and format requirements,
upon the request of a participant, beneficiary, or enrollee.
A majority of commenters supported the Departments' proposal and
urged the Departments to finalize this section of the proposed rules.
Many commenters were supportive of being able to know their costs
before receiving care in order to make informed shopping decisions.
Some commenters agreed that consumers should have access to cost
information in advance of receiving care, but suggested modifications
to the proposed requirements. The final rules adopt the requirement
that plans and issuers disclose certain cost-sharing information for a
particular health care item or service, generally as set forth in the
proposed rules, but with certain modifications and clarifications
explained later in this section of this preamble.
1. Information Required To Be Disclosed to Participants, Beneficiaries,
or Enrollees
Based on significant research and review of public comments, the
Departments concluded that requiring group health plans and health
insurance issuers to disclose to participants, beneficiaries, or
enrollees cost-sharing information in the manner most familiar to them
is the best means to empower individuals to understand their potential
cost-sharing liability for covered items and services furnished by
particular providers. The Departments, therefore, modeled the proposed
price transparency requirements on existing notice requirements.
Specifically, section 2719 of the PHS Act (incorporated into the
Code by section 9815 of the Code and into ERISA by section 715 of
ERISA) requires non-grandfathered plans and issuers offering non-
grandfathered coverage in the individual or group markets to provide a
notice of adverse benefit determination (typically satisfied by the
EOB) to participants, beneficiaries, or enrollees after health care
items or services are furnished and claims for benefits are
adjudicated. EOBs typically include the amount billed by a provider for
items and services, negotiated rates or underlying fee schedules with
in-network providers or allowed amounts for out-of-network providers,
the amount the plan paid to the provider, and the individual's
obligation for deductibles, copayments, coinsurance, and any other
balance under the provider's bill. Consumers are accustomed to seeing
cost-sharing information as it is presented in an EOB. The proposed
rules were intended to similarly require plans and issuers to provide
the specific price and benefit information on which an individual's
cost-sharing liability is based. Based on comments, the Departments are
of the view that participants, beneficiaries, and enrollees would also
benefit from understanding the price of items and services, even in
circumstances when their cost-sharing liability is not based upon a
negotiated rate or underlying fee schedule rate. Given this primary
goal of overall price transparency, the Departments are requiring
disclosure of the negotiated rate, even if it is not the amount used as
the basis for cost-sharing liability.
The proposed rules set forth seven content elements that a plan or
issuer must disclose, upon request, to a participant, beneficiary, or
enrollee for a covered item or service: estimated cost-sharing
liability, accumulated amounts, negotiated rates, out-of-network
allowed amounts, a list of items and services subject to bundled
payment arrangements, a notice of prerequisites, if applicable, and a
disclosure notice. These seven content elements generally reflect the
same information that is included in an EOB after health care services
are provided. The Departments determined that each of the seven content
elements, as well as two additional content elements, are necessary and
appropriate to implement the mandates of section 2715A of the PHS Act
and section 1311(e)(3)(C) of PPACA by permitting individuals to learn
the amount of their cost-sharing liability and understand the price for
specific items or services under a plan
[[Page 72179]]
or coverage from a particular provider. The final rules adopt the
requirement that plans and issuers must satisfy these elements through
disclosure of actual data relevant to an individual's cost-sharing
liability that is accurate at the time the request is made. The
Departments acknowledge that plans and issuers may not have processed
all of an individual's outstanding claims when the individual requests
the information; therefore, plans and issuers would not be required to
account for outstanding claims that have not yet been fully processed.
As set forth in 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2, and 45
CFR 147.211 this cost-sharing information must be disclosed upon
request in two ways: (1) Through a self-service tool that meets certain
standards and is available on an internet website, and (2) in paper
form, if requested by the participant, beneficiary, or enrollee.
Furthermore, under the final rules, the cost-sharing information
must be disclosed to the participant, beneficiary, or enrollee in plain
language. The final rules define ``plain language'' to mean written and
presented in a manner calculated to be understood by the average
participant, beneficiary, or enrollee. Determining whether this
standard has been satisfied requires an exercise of considered judgment
and discretion, taking into account such factors as the level of
comprehension and education of typical participants, beneficiaries, or
enrollees in the plan or coverage and the complexity of the terms of
the plan or coverage. Accounting for these factors would likely require
limiting or eliminating the use of technical jargon and long, complex
sentences, so that the information provided will not have the effect of
misleading, misinforming, or failing to inform participants,
beneficiaries, or enrollees.
Several commenters agreed that the information found in an EOB is a
good basis for informing individuals of their cost-sharing liability
and will effectively further coverage transparency efforts. One
commenter stated that information found in an advance EOB is neither a
trade secret, nor proprietary, as it is routinely disclosed following
care. Other commenters expressed concern about this concept of an
advance EOB, stating that most plans and issuers do not have access to
all the information necessary to provide beneficiaries with an upfront
adjudication of the beneficiary's claim, and that the vast majority of
data provided via online tools now rely on estimated costs drawn from
publicly available sources rather than personal information and
circumstances.
Many commenters expressed concerns that the elements and methods of
disclosure proposed by the Departments are overly prescriptive,
hindering health plan innovation and requiring potentially significant
reworking of existing transparency tools, as well as requiring massive
IT and resource investments by all commercial plans and issuers to
develop, build or modify, test, and implement tools that meet the new
standards. Several commenters recommended providing plans and issuers
with flexibility to build upon current systems. Another commenter urged
the Departments to evaluate the individualized tools currently
available, and that if requirements for cost-estimator tools are
adopted, they should give carriers and TPAs maximum flexibility in
designing their tools. One commenter felt a better approach would be to
educate consumers about the online tools that are currently available
and assist employers to encourage their use. Several commenters opposed
the requirement to provide the tool and suggested the Departments
remove this requirement from the final rules altogether. These
commenters stated that price estimator tools should not be required,
citing studies showing low tool utilization by consumers and plan
participants, beneficiaries, or enrollees. These commenters stated that
the administration should instead focus on educating consumers about
the online tools that are currently available and assisting employers
and plans in encouraging their use.
The Departments are of the view that modeling the pricing
disclosures on the elements provided within an EOB is both reasonable
and appropriate. The Departments acknowledge the potential burden of
updating existing tools to comply with the final rules, but the
Departments think that the potential burden is outweighed by the
importance of all enrollees, beneficiaries, and participants having
access to self-service tools that provide a baseline of accurate
pricing elements. The Departments also acknowledge that, historically,
there has been low utilization of existing tools; however, the
Departments are of the view that by creating minimum uniform standards,
consumers will have access to more reliable, personalized estimates and
will be more likely to use the tools.
As described earlier in this preamble, through independent
examination and engagement with stakeholders, the Departments are of
the view that existing tools vary widely in usability and reliability
due to the lack of minimum standards.\106\ The Departments received
thousands of supportive comments from individuals eager for access to
transparent pricing information, indicating that the current tools
available are inadequate in practice. Furthermore, as discussed in
great detail throughout this preamble, as consumers increasingly become
financially responsible for a greater proportion of the cost of their
care (through deductible and coinsurance requirements, for example)
they have a vested interest in comparing prices of potential providers
and such items as prescription drugs. As such, it is likely in the best
interest of plans, issuers, and providers to promote and educate their
consumers on the benefits of these shopping tools, and the Departments
encourage them to do so. The Departments do not agree with the
commenter who stated that educating consumers regarding existing tools
and encouraging their use would be a better approach than requiring the
self-service tool as proposed. While the Departments agree that
educating consumers on existing self-service tools is important, it
does not replace the benefits of making reliable self-service tools
available to most participants, beneficiaries, and enrollees in private
market plans and coverages. The Departments are of the view that
minimum consistent requirements for all plans and issuers may lead to
an increase in health literacy and drive consumerism as participants,
beneficiaries, and enrollees become more familiar with how plans and
issuers calculate cost-sharing liability. Furthermore, the final rules
adopt a phased implementation approach to these requirements as a
mechanism to help mitigate the associated implementation burdens.
---------------------------------------------------------------------------
\106\ ``Are healthcare's cost estimate tools making matters
worse for patients?'' Becker's Hospital CFO Report, November 2015.
Available at: https://www.beckershospitalreview.com/finance/are-healthcare-s-cost-estimate-tools-making-matters-worse-for-patients.html. Citing Gordon, E. ``Patients Want to Price-Shop For
Care, But Online Tools Unreliable.'' NPR. November 30, 2015,
Available at https://www.npr.org/sections/health-shots/2015/11/30/453087857/patients-want-to-price-shop-for-care-but-online-tools-unreliable. (``Some estimators reflect a combined range of possible
costs, while others are based off historical pricing or claims data
from various sources. Many online estimate tools are restricted in
the types of procedures they include. . .'').
---------------------------------------------------------------------------
Some commenters requested that the Departments confirm that the
intent of the proposed rules is that only participants and
beneficiaries enrolled in the plan would have access to the tool,
noting that the proposed regulations used the ERISA definitions of
``participant'' and ``beneficiary,''
[[Page 72180]]
which include individuals who may become eligible for the plan. Many
commenters encouraged the Departments to also require that plans and
issuers make cost-sharing information easily accessible to authorized
representatives--which may include health care providers--so that they
can better respond to patient inquiries. These commenters suggested
that patients reasonably turn to providers for this information when
contemplating or scheduling health care services, but providers often
face barriers in accessing the necessary details from issuers to
provide a timely, accurate estimate. Commenters suggested that plans
and issuers should be required to give providers access to their
patients' specific benefit information via a secure website, subject to
patient consent. One commenter recommended that the tool be made
applicable for the public while they are in the shopping and plan
selection phase, not just after someone is enrolled in a plan. This
commenter suggested that true cost transparency would not be possible
if this information was not made available in advance.
The final rules clarify that disclosures of cost-sharing
information are only required to individuals who are enrolled in the
plan or coverage; no disclosures are required to be made to a
``participant'' or ``beneficiary'' solely because they might become
eligible for the plan in the future. This is reflected by a revision to
the proposed language being finalized at 26 CFR 54.9815-2715A2(b), 29
CFR 2590.715-2715A2(b), and 45 CFR 147.211(b) to refer to plans and
issuers providing cost-sharing information to a participant,
beneficiary, or enrollee who is enrolled in a plan or coverage. The
Departments understand the value in provider access to cost-sharing
information required under the final rules. However, this rulemaking
focuses on implementing the statutory obligation for plans to make this
information available to participants, beneficiaries, and enrollees. A
participant, beneficiary, or enrollee may choose to share information
regarding their personal cost-sharing liability with a provider for the
purposes of making health care decisions. The final rules also require
that this information must be provided to a participant's,
beneficiary's, or enrollee's authorized representative. Under other
applicable regulations, participants, beneficiaries, or enrollees may
appoint a health care provider as their authorized representative.\107\
---------------------------------------------------------------------------
\107\ 29 CFR 2560.503-1(b)(4); see also 26 CFR 54.9815-
2719(b)(2)(i), 29 CFR 2590.715-2719(b)(2)(ii), and 45 CFR
147.136(b)(2)(ii).
---------------------------------------------------------------------------
Regarding whether other types of information should be required to
be disclosed in the self-service tool, several commenters expressed
concern that information regarding cost without accompanying provider
quality information could have a detrimental effect on overall health
care cost and delivery of value-based care. One commenter stated that
shifting care to a lower-cost provider could have unintended
consequences of higher costs associated with unnecessary or improper
care. Commenters recommended that a quality metric be included and that
quality information be allowed to be included alongside price.
As discussed in the background section of this preamble and later
in this preamble, the Departments acknowledge that quality information
could be a valuable addition to a self-service tool. However, the
Departments did not propose to require disclosure of quality
information. Rather, the Departments sought comments regarding quality
information in the proposed rules and plan to take those comments into
consideration for future action. The Departments encourage plans and
issuers to further innovate around the baseline standards outlined
above and include quality information and other metrics not required by
the final rules that would assist in consumer decision-making.
Several commenters suggested that plans and issuers should be
required to disclose information not directly related to cost sharing.
One commenter urged the Departments to include an additional
requirement in the final rules for plans and issuers to provide
consumers with information they need to fully understand their cost-
sharing obligations for emergency services at the time they obtain
their coverage, and recommended plans and issuers also update this
information on an annual basis or when major changes occur that would
impact their access to, and overall cost of, emergency care, such as
changes to their provider. Another commenter recommended that when
consumers enter a search for a primary service or treatment, that they
also be provided with an ``alert'' that additional services, such as
anesthesia, pathology, or laboratory tests, likely will be involved and
will entail additional costs, which should also be disclosed. Another
commenter requested that the Departments add the ``type of plan'' (for
example, ERISA-covered group health plan, a QHP, a Medicare Advantage
plan, a Medicaid MCO plan, an individual health plan, or a plan that is
grandfathered from PPACA requirements) and in what state the plan is
providing coverage as disclosure content elements that health plans
would be required to post on the proposed internet-based self-service
tool, so that the information is readily available.
The Departments recognize the benefit of providing information for
emergency services at the time consumers obtain their coverage. The
Departments are of the view, however, that existing rules governing
summaries of benefits and coverage are designed to provide such
information to consumers at the time they obtain coverage. As such, the
Departments are not inclined to duplicate existing requirements in the
final rules. The Departments also acknowledge that alerting consumers
to additional services associated with a service or treatment for which
they searched could be beneficial. For this reason, the final rules
provide plans and issuers flexibility to give disclaimers that can
address the likelihood that services in addition to the one for which a
consumer searched will be necessary. The final rules also require that
plans and issuers outline individual services when a consumer requests
an estimate for a service that, per the agreement between a payer and a
provider, will be provided and billed as a bundle. Plans and issuers
are also free to provide such information in any way they so choose,
including through an alert. The Departments are also of the view that
participants, beneficiaries, and enrollees are generally aware of the
type of plan they are enrolled in or can reasonably access this
information by contacting their plan or issuer and therefore decline to
require this information as part of the final rules.
Scope of Items and Services
Many commenters stated that the requirement to disclose the price
of all covered items and services was overly broad and overly
burdensome, and instead suggested the Departments limit disclosure to a
core set of ``shoppable services'' that are commonly searched for in
existing cost-estimator tools. Many commenters referenced the recently
finalized definition of a shoppable service that was included in the
Hospital Price Transparency final rule as ``a service that can be
scheduled by a health care consumer in
[[Page 72181]]
advance.'' \108\ Two commenters recommended no more than 300 shoppable
items and services, while another suggested a limit of 200. As a way to
reduce the cost burden, one commenter suggested that the requirements
under the rules be limited to services that are priced above a certain
threshold and provided $5,000 as an example. One commenter said the
Departments should permit health plans and issuers to tailor their
tools to best meet their enrollees' and providers' demonstrated needs
and priorities, including selection of the items and services for which
estimates are most useful and meaningful for participants,
beneficiaries, and enrollees. Another commenter recommended that the
cost-sharing requirement be limited to items and services where the
estimated out-of-pocket price is frequently the same as the final
price. Another recommended the tool not require data on those items/
services with volatile prices or low volume.
---------------------------------------------------------------------------
\108\ 84 FR 65524 (Nov. 27, 2019) (codified at 45 CFR 180.20).
---------------------------------------------------------------------------
One commenter, representing many plans and issuers, provided a list
of 421 items and services that they recommended including under this
disclosure requirement. The recommended list of 421 items and services
are a result of an analysis the commenter performed which compared
member feedback, claims frequency, operational feasibility, and state
mandates and regulations, as well as variability of cost and search
frequency. All 421 items and services were included by, at the minimum,
a subset of issuers, indicating confidence that the covered items and
services were shoppable. This commenter also noted that their survey of
existing tools found a median of 526 services available to consumers
enrolled in commercial coverage.
A few commenters recommended that the Departments limit the list of
items and services to only major medical services. One commenter
recommended the Departments not include cost sharing for DME. Several
commenters suggested that a Technical Expert Panel (TEP) was needed to
review data and input from stakeholders, advise on research the
Departments should undertake, and determine which items and services
and functional requirements would be suitable to include in the future.
Many individual commenters expressed their desire for dental,
vision, and other excepted benefits to be included under the
requirements of the final rules or in the near future. Further, a
majority of individual commenters encouraged the Departments to require
the inclusion of all items and services, stating that consumers have a
right to know this information for all items and services in advance.
Several commenters recommended that the rules be implemented in a more
gradual phased-in timeline, by requiring the tool to cover a narrower
data set of the most common shoppable services first and then broadened
to eventually include all items and services. Another commenter stated
that to the extent that the services include non-medical estimates like
pharmacy and dental costs, those costs could likely only be included by
allowing third parties that fulfill those benefits to provide separate
transparency tools that integrate with a plan's tool.
The Departments agree with commenters who stated that consumers
should be given price estimates in advance, and the Departments
understand that what is considered useful and meaningful pricing
information is likely to be unique to an individual's circumstances.
For these reasons, and the rationale for this rulemaking described
throughout this preamble, the Departments decline to accept suggestions
related to limiting the number or types of items and services included
under this requirement. However, the Departments acknowledge the
potential burden of incorporating all items and services into a self-
service tool immediately and are therefore finalizing a phased-in
implementation timeline. Under the final rules, plans and issuers are
required to provide estimates for the 500 items and services identified
in Table 1 for plan years (in the individual market, for policy years)
beginning on or after January 1, 2023. However, plans and issuers will
be required to disclose pricing information with respect to all items
and services for plan years (in the individual market, for policy
years) beginning on or after January 1, 2024. Given that pricing
estimates for all items and services will ultimately be required, the
Departments do not find it necessary to convene a TEP to determine
which items and services and functional requirements would be suitable
to include in the future.
Further, in finalizing the provision that plans and issuers
disclose cost-sharing liability information for all covered items and
services, the Departments are clarifying that cost-sharing information
must also be provided for covered prescription drugs and DME. As
discussed later in this preamble, a plan or issuer will be considered
compliant with this requirement if it offers its participants,
beneficiaries, or enrollees access to the pricing information that is
required under 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2, and 45
CFR 147.211, through a third-party tool, such as a PBM tool. As
discussed elsewhere in this preamble, the Departments clarify that
excepted benefits, such as limited-scope dental benefits offered under
a separate policy, certificate, or contract of insurance that are not
an integral part of a group health plan or health insurance coverage,
are not subject to the requirements established under the final rules.
In developing the list of 500 items and services that are required
to be included in the self-service tool during the first year of
implementation, the Departments considered the recommendations made by
the commenters to include shoppable items and services that are
commonly used in existing tools. As mentioned above, in a survey of
existing price transparency tools currently in use, one commenter found
that the median number of items and services in existing tools is 526.
Table 1 lists 500 items and services that will be required to be
included in the first phase of implementation of the internet-based
self-service tool. The Departments will publish a copy of this list on
a publicly available website. The majority of these items and services
(416) are based on the recommendation of several stakeholders. The
Departments have determined not to include five of the recommended
codes because they have since been retired. The Departments augmented
the list with 84 additional services. These 84 services reflect some of
the most frequently found services in External Data Gathering
Environment (EDGE) \109\ data, which are representative of services
commonly provided in the individual and small group (or merged)
markets. The Departments also examined the aggregate claims costs
associated with these services nationally and concluded that these
services could
[[Page 72182]]
have significant cost variability, ranging from the 25th percentile to
the 75th percentile of costs, depending on service.
---------------------------------------------------------------------------
\109\ CMS began collecting enrollee-level data from issuers'
EDGE servers beginning with the 2016 benefit year. See the HHS
Notice of Benefit and Payment Parameters for 2018; Final Rule, 81 FR
94058, 94101-94103 (Dec. 22, 2016). The enrollee-level EDGE data
collected by CMS includes an enrollment file, a medical claims file,
a pharmacy claims file, and a supplemental diagnosis file for risk
adjustment-covered plans in the states where HHS operates the risk
adjustment program. CMS does not collect enrollee-identifiable
elements to safeguard enrollee privacy and issuers' proprietary
information. See, for example, 45 CFR 153.720.
Table 1--500 Items and Services List
------------------------------------------------------------------------
Code Description Plain language description
------------------------------------------------------------------------
J0702............. BETAMETHASONE ACET&SOD Injection to treat reaction
PHOSP. to a drug.
J1745............. INFLIXIMAB NOT BIOSIMIL A biologic medication.
10MG.
G0102............. Prostate cancer ...........................
screening; digital
rectal examination.
G0103............. Prostate cancer ...........................
screening; prostate
specific antigen test
(psa).
G2061............. Qualified non physician Qualified non physician
healthcare healthcare professional
professional online online assessment, for an
assessment; 5-10 established patient, for
minutes. up to seven days,
cumulative time during the
7 days; 5-10 minutes.
G2062............. Qualified non physician Qualified non physician
healthcare healthcare professional
professional online online assessment service,
assessment service; 11- for an established
20 minutes. patient, for up to seven
days, cumulative time
during the 7 days; 11-20
minutes.
G2063............. Qualified non physician Qualified non physician
qualified healthcare qualified healthcare
professional professional assessment
assessment service; service, for an
21+ minutes. established patient, for
up to seven days,
cumulative time during the
7 days; 21 or more
minutes.
G0206............. Diagnostic mammography, ...........................
including computer-
aided detection (cad)
when performed;
unilateral.
G0204............. Diagnostic mammography, ...........................
including computer-
aided detection (cad)
when performed;
bilateral.
G0121............. Colon ca scrn; not hi Colorectal cancer
risk ind. screening; colonoscopy on
individual not meeting
criteria for high risk.
G0105............. Colorectal ca scrn; hi Colorectal cancer
risk ind. screening; colonoscopy on
individual at high risk.
S0285............. Cnslt before screen Colonoscopy consultation
colonosc. performed prior to a
screening colonoscopy
procedure.
G0289............. Arthro, loose body + Arthroscopy, knee,
chondro. surgical, for removal of
loose body, foreign body,
debridement/shaving of
articular cartilage
(chondroplasty) at the
time of other surgical
knee arthroscopy in a
different compartment of
the same knee.
G0120............. Colon ca scrn; barium Colorectal cancer
enema. screening; alternative to
g0105, screening
colonoscopy, barium enema.
460............... SPINAL FUSION Spinal fusion except
(POSTERIOR). cervical.
470............... KNEE REPLACEMENT....... Major joint replacement or
reattachment of lower
extremity.
473............... SPINAL FUSION Cervical spinal fusion.
(ANTERIOR).
743............... HYSTERECTOMY........... Uterine and adnexa
procedures for non-
malignancy.
1960.............. Anesthesia for vaginal ...........................
delivery.
1961.............. Anesthesia for cesarean ...........................
delivery.
1967.............. Anesthesia for labor ...........................
during planned vaginal
delivery.
1968.............. Anesthesia for cesarean ...........................
delivery following
labor.
10005............. FNA W IMAGE............ Fine needle aspiration
biopsy, including
ultrasound guidance; first
lesion.
10021............. FNA W/O IMAGE.......... Fine Needle Aspiration
Biopsy without imaging.
10040............. ACNE SURGERY........... Incision and Drainage
Procedures on the Skin,
Subcutaneous and Accessory
Structures.
10060............. DRAINAGE OF SKIN Incision and drainage of
ABSCESS. abscess; simple or single
and complex or multiple.
10140............. DRAINAGE OF HEMATOMA/ Incision and drainage of
FLUID. hematoma, seroma or fluid
collection.
10160............. PUNCTURE DRAINAGE OF Puncture aspiration of
LESION. abscess, hematoma, bulla,
or cyst.
11000............. DEBRIDE INFECTED SKIN.. Removal of infected skin.
11056............. TRIM SKIN LESIONS 2 TO Paring or cutting of benign
4. hyperkeratotic lesion.
11102............. BIOPSY SKIN LESION..... Tangential biopsy of skin
(for example, shave,
scoop, saucerize,
curette); single lesion.
11103............. BIOPSY SKIN ADD-ON..... Tangential biopsy of skin
(for example, shave,
scoop, saucerize,
curette); each separate/
additional lesion.
11200............. REMOVAL OF SKIN TAGS 15 common
MORE. or plantar warts.
17250............. CHEM CAUT OF GRANLTJ Chemical destruction of pre-
TISSUE. cancerous lesions of the
skin.
[[Page 72183]]
17311............. MOHS 1 STAGE H/N/HF/G.. Micrographic technique,
including removal of all
gross tumor, surgical
excision of tissue
specimens, mapping, color
coding of specimens,
microscopic examination of
specimens.
19120............. REMOVAL OF BREAST ...........................
LESION.
20550............. INJ TENDON SHEATH/ Injection of medication
LIGAMENT. into a tendon or ligament.
20551............. INJ TENDON ORIGIN/ Injection of medication
INSERTION. into the tendon/ligament
origin.
20553............. INJECT TRIGGER POINTS 3/ Injection of medication
>. into an area that triggers
pain.
20600............. DRAIN/INJ JOINT/BURSA W/ Draining or injecting
O US. medication into a small
joint/bursa without
ultrasound.
20605............. DRAIN/INJ JOINT/BURSA W/ Draining or injecting
O US. medication into a large
joint/bursa without
ultrasound.
20610............. DRAIN/INJ JOINT/BURSA W/ Draining or injecting
O US. medication into a major
joint/bursa without
ultrasound.
20612............. ASPIRATE/INJ GANGLION Removal of fluid or
CYST. injection of medication
into a ganglion cyst.
27440............. Revision of knee joint. Repair of knee joint.
27441............. Revision of knee joint. Repair of knee joint.
27442............. Revision of knee joint. Repair of knee joint.
27443............. Revision of knee joint. Repair of knee joint.
27445............. Revision of knee joint. Repair of knee joint with
hinged prosthesis.
27446............. Revision of knee joint. Repair of knee joint.
28296............. CORRECTION HALLUX Under Repair, Revision, and/
VALGUS. or Reconstruction
Procedures on the Foot and
Toes.
29826............. Subacromial Shaving of shoulder bone
Decompression. using an endoscope.
29848............. WRIST ENDOSCOPY/SURGERY Carpal tunnel release.
29880............. KNEE ARTHROSCOPY/ Surgery to remove of all or
SURGERY. part of a torn meniscus in
both medial and lateral
compartments.
29881............. KNEE ARTHROSCOPY/ Surgery to remove of all or
SURGERY. part of a torn meniscus in
one compartment.
29888............. KNEE ARTHROSCOPY/ ACL reconstruction.
SURGERY.
30520............. REPAIR OF NASAL SEPTUM. Repair procedures of the
nose.
31231............. NASAL ENDOSCOPY DX..... Nasal endoscopy,
diagnostic, unilateral or
bilateral.
31237............. NASAL/SINUS ENDOSCOPY Surgical nasal/sinus
SURG. endoscopy with biopsy,
polypectomy or
debridement.
31575............. DIAGNOSTIC LARYNGOSCOPY Flexible, fiberoptic
diagnostic laryngoscopy.
36415............. ROUTINE VENIPUNCTURE... Collection of venous blood
by venipuncture.
36471............. NJX SCLRSNT MLT Injections to remove spider
INCMPTNT VN. veins on the limbs or
trunk.
36475............. ENDOVENOUS RF 1ST VEIN. Ablation of incompetent
vein.
36478............. ENDOVENOUS LASER 1ST Laser removal of
VEIN. incompetent vein.
42820............. REMOVE TONSILS AND Removal of tonsils and
ADENOIDS. adenoid glands patient
younger than age 12.
42826............. REMOVAL OF TONSILS..... Primary or secondary
removal of tonsils.
42830............. REMOVAL OF ADENOIDS.... Primary removal of the
adenoids.
43235............. EGD DIAGNOSTIC BRUSH Diagnostic examination of
WASH. esophagus, stomach, and/or
upper small bowel using an
endoscope.
43239............. EGD BIOPSY SINGLE/ Biopsy of the esophagus,
MULTIPLE. stomach, and/or upper
small bowel using an
endoscope.
43846............. Gastric restrictive Surgical procedure used for
procedure, with weight loss resulting in a
gastric bypass for partial removal of
morbid obesity; with stomach.
small intestine
reconstruction to
limit absorption.
44388............. Colonoscopy thru stoma Diagnostic examination of
spx. large bowel using an
endoscope which is
inserted through abdominal
opening.
44389............. Colonoscopy with biopsy Biopsies of large bowel
using an endoscope which
is inserted through
abdominal opening.
44394............. Colonoscopy w/snare.... Removal of large bowel
polyps or growths using an
endoscope.
45378............. DIAGNOSTIC COLONOSCOPY. Diagnostic examination of
large bowel using an
endoscope.
45379............. Colonoscopy w/fb Removal of foreign bodies
removal. in large bowel using an
endoscope.
45380............. COLONOSCOPY AND BIOPSY. Biopsy of large bowel using
an endoscope.
45381............. Colonoscopy submucous Injections of large bowel
njx. using an endoscope.
45382............. Colonoscopy w/control Control of bleeding in
bleed. large bowel using an
endoscope.
45384............. Colonoscopy w/lesion Removal of polyps or
removal. growths in large bowel
using an endoscope.
45385............. COLONOSCOPY W/LESION Removal of polyps or
REMOVAL. growths of large bowel
using an endoscope.
45386............. Colonoscopy w/balloon Balloon dilation of large
dilat. bowel using an endoscope.
45388............. Colonoscopy w/ablation. Destruction of large bowel
growths using an
endoscope.
45390............. Colonoscopy w/resection Removal of large bowel
tissue using an endoscope.
45391............. Colonoscopy w/endoscope Ultrasound examination of
us. lower large bowel using an
endoscope.
45392............. Colonoscopy w/ Ultrasound guided needle
endoscopic fnb. aspiration or biopsy of
lower large bowel using an
endoscope.
45398............. Colonoscopy w/band Tying of large bowel using
ligation. an endoscope.
47562............. LAPAROSCOPIC Removal of gallbladder
CHOLECYSTECTOMY. using an endoscope.
47563............. LAPARO CHOLECYSTECTOMY/ Gallbladder removal with
GRAPH. use of an x-ray exam of
the bile ducts.
49505............. PRP I/HERN INIT REDUC Repair of groin hernia
>5 YR. patient age 5 years or
older.
49585............. RPR UMBIL HERN REDUC > Repair of umbilical hernia
5 YR. in patients over 5 years
old.
49650............. LAP ING HERNIA REPAIR Inguinal hernia repair done
INIT. by laparoscope.
50590............. FRAGMENTING OF KIDNEY Surgical procedures on the
STONE. kidney to break up and
remove kidney stones.
51741............. ELECTRO-UROFLOWMETRY A diagnostic test used to
FIRST. measure the flow of urine.
51798............. US URINE CAPACITY Ultrasound of bladder to
MEASURE. measure urine capacity.
52000............. CYSTOSCOPY............. Procedure on the bladder.
52310............. CYSTOSCOPY AND Removing an indwelling
TREATMENT. ureteral stent by
cystoscopy.
[[Page 72184]]
52332............. CYSTOSCOPY AND Ureteral stents inserted
TREATMENT. internally between the
bladder and the kidney and
will remain within the
patient for a defined
period of time.
55250............. EXCISION PROCEDURES ON Removal of sperm duct(s).
THE VAS DEFERENS.
55700............. Prostate biopsy........ Biopsy of prostate gland.
55866............. Surgical Procedures on Surgical removal of
the Prostate. prostate and surrounding
lymph nodes using an
endoscope.
57022............. Incision and drainage ...........................
of vaginal blood
accumulation following
delivery.
57288............. REPAIR BLADDER DEFECT.. Replacement of sling to
support the bladder.
57454............. BX/CURETT OF CERVIX W/ Biopsy of cervix or uterus.
SCOPE.
58100............. EXCISION PROCEDURES ON Biopsy of the lining of the
THE CORPUS UTERI. uterus.
58558............. HYSTEROSCOPY BIOPSY.... Surgical hysteroscopy with
biopsy.
58563............. HYSTEROSCOPY ABLATION.. Surgical procedure used to
treat premenopausal
abnormal uterine bleeding.
58565............. HYSTEROSCOPY Laparoscopic/Hysteroscopic
STERILIZATION. Procedures on the uterus.
58571............. TLH W/T/O 250 G OR LESS Laparoscopic hysterectomy.
58661............. LAPAROSCOPY REMOVE Removal of either benign or
ADNEXA. malignant tissue from the
uterus, ovaries, fallopian
tubes, or any of the
surrounding tissues using
a laparoscope.
58662............. LAPAROSCOPY EXCISE Removal of lesions of the
LESIONS. ovary, pelvic viscera, or
peritoneal surface.
58671............. LAPAROSCOPY TUBAL BLOCK Laparoscopic tubal
sterilization is surgery
to block the fallopian
tubes to prevent
pregnancy.
59000............. AMNIOCENTESIS Removal of amniotic fluid
DIAGNOSTIC. from the uterus for
diagnostic purposes.
59025............. FETAL NON-STRESS TEST.. A common prenatal test used
to check on a baby's
health.
59400............. OBSTETRICAL CARE....... Obstetrical pre- and
postpartum care and
vaginal delivery.
59409............. Vaginal delivery....... ...........................
59410............. Vaginal delivery with ...........................
post-delivery care.
59414............. Vaginal delivery of ...........................
placenta.
59425............. Pre-delivery care 4-6 ...........................
visits.
59426............. Pre-delivery care 7 or ...........................
more visits.
59510............. CESAREAN DELIVERY...... Cesarean delivery with pre-
and post-delivery care.
59514............. Cesarean delivery...... ...........................
59515............. Cesarean delivery with ...........................
post-delivery care.
59610............. VBAC DELIVERY.......... Vaginal delivery after
prior cesarean delivery.
59612............. Vaginal delivery after ...........................
prior cesarean
delivery.
59614............. Vaginal delivery after ...........................
prior cesarean
delivery with post-
delivery care.
62322............. SPINAL INJECTION FOR Injection of substance into
PAIN MANAGEMENT. spinal canal of lower back
or sacrum using imaging
guidance.
62323............. Injection of substance ...........................
into spinal canal of
lower back or sacrum
using imaging guidance.
63030............. LOW BACK DISK SURGERY.. Surgical procedure to
decompress a herniated
vertebra.
64483............. Transforaminal Epidural Injections of anesthetic
Injection. and/or steroid drug into
lower or sacral spine
nerve root using imaging
guidance.
64493............. INJ PARAVERT F JNT L/S Injection into lower back
1 LEV. of nerve block using
imaging guidance.
64721............. CARPAL TUNNEL SURGERY.. Release of the transverse
carpal ligament.
66821............. YAG capusulotomy Removal of recurring
surgery. cataract in lens capsule
using laser.
66984............. CATARACT SURG W/IOL 1 Removal of cataract with
STAGE. insertion of lens.
67028............. INJECTION EYE DRUG..... Injection of a
pharmaceutical agent into
the eye.
69210............. REMOVE IMPACTED EAR WAX Removal of ear wax from one
or both ears.
69436............. CREATE EARDRUM OPENING. Insertion of tubes into one
or both ears.
70450............. CT HEAD/BRAIN W/O DYE.. CT scan head or brain
without dye.
70486............. CT MAXILLOFACIAL W/O CT Scan of the face and jaw
DYE. without dye.
70491............. CT SOFT TISSUE NECK W/ CT scan of neck with dye.
DYE.
70551............. MRI BRAIN STEM W/O DYE. MRI of brain stem without
dye.
70553............. MRI BRAIN STEM W/O & W/ MRI scan of brain before
DYE. and after contrast.
71045............. CHEST X-RAY............ Single view.
71046............. CHEST X-RAY............ 2 views, front and back.
71047............. CHEST X-RAY............ 3 views.
71048............. CHEST X-RAY............ 4 or more views.
71101............. X-RAY EXAM UNILAT RIBS/ Radiologic examination of
CHEST. one side of the chest/
ribs.
71250............. CT THORAX W/O DYE...... CT scan of the thorax
without dye.
71260............. CT THORAX W/DYE........ CT scan of the thorax with
dye.
71275............. CT ANGIOGRAPHY CHEST... Diagnostic Radiology
(Diagnostic Imaging)
Procedures of the Chest.
72040............. X-RAY EXAM NECK SPINE 2- Radiologic examination of
3 VW. the neck/spine, 2-3 views.
72050............. X-RAY EXAM NECK SPINE 4/ Radiologic examination of
5VWS. the neck/spine, 4-5 views.
72070............. X-RAY EXAM THORAC SPINE Radiologic examination of
2VWS. the middle spine, 2 views.
72072............. X-RAY EXAM THORAC SPINE Radiologic examination of
3VWS. the middle spine, 3 views.
72100............. X-RAY EXAM L-S SPINE 2/ X-ray of the lower spine 2-
3 VWS. 3 views.
72110............. X-RAY EXAM L-2 SPINE 4/ X-ray of lower and sacral
>VWS. spine, minimum of 4 views.
72131............. CT LUMBAR SPINE W/O DYE CT scan of lower spine
without dye.
72141............. MRI NECK SPINE W/O DYE. MRI of the neck or spine
without dye.
72146............. MRI CHEST SPINE W/O DYE MRI of chest and spine
without dye.
[[Page 72185]]
72148............. MRI LUMBAR SPINE W/O MRI scan of lower spinal
DYE. canal.
72156............. MRI NECK SPINE W/O & W/ MRI of neck/spine with and
DYE. without dye.
72157............. MRI CHEST SPINE W/O & W/ MRI of chest and spine with
DYE. and without dye.
72158............. MRI LUMBAR SPINE W/O & MRI of lower back with and
W/DYE. without dye.
72170............. X-RAY EXAM OF PELVIS... Radiologic examination of
the pelvis.
72192............. CT PELVIS W/O DYE...... CT of pelvis without dye.
72193............. CT PELVIS W/DYE........ CT scan, pelvis, with
contrast.
72195............. MRI PELVIS W/O DYE..... MRI of pelvis without dye.
72197............. MRI PELVIS W/O & W/DYE. MRI of pelvis before and
after dye.
73000............. X-RAY EXAM OF COLLAR Radiologic examination of
BONE. the collar bone.
73030............. X-RAY EXAM OF SHOULDER. Radiologic examination of
the shoulder.
73070............. X-RAY EXAM OF ELBOW.... Radiologic examination,
elbow; 2 views.
73080............. X-RAY EXAM OF ELBOW.... Radiologic examination,
elbow; 3 or more views.
73090............. X-RAY EXAM OF FOREARM.. Radiologic examination of
the forearm.
73100............. X-RAY EXAM OF WRIST.... 3 or more views.
73110............. X-RAY EXAM OF WRIST.... Up to 3 views.
73120............. X-RAY EXAM OF HAND..... X-ray of the hand with 2
views.
73130............. X-RAY EXAM OF HAND..... X-ray of the hand with 3 or
more views.
73140............. X-RAY EXAM OF FINGER(S) Radiologic examination of
the finger(s).
73221............. MRI JOINT UPR EXTREM W/ MRI of upper extremity
O DYE. without dye.
73560............. X-RAY EXAM OF KNEE 1 OR Radiologic examination of
2. the knee with 1 or 2
views.
73562............. X-RAY EXAM OF KNEE 3... Radiologic examination of
the knee with 3 views.
73564............. X-RAY EXAM KNEE 4 OR Radiologic examination of
MORE. the knee with 4 or more
views.
73565............. X-RAY EXAM OF KNEES.... Radiologic examination of
both knees.
73590............. X-RAY EXAM OF LOWER LEG Radiologic examination of
the lower leg.
73600............. X-RAY EXAM OF ANKLE.... Radiologic examination of
the ankle with 2 views.
73610............. X-RAY EXAM OF ANKLE.... Radiologic examination of
the ankle with 3 views.
73620............. X-RAY EXAM OF FOOT..... Radiologic examination,
foot; 2 views.
73630............. X-RAY EXAM OF FOOT..... Radiologic examination of
the foot with 3 or more
views.
73650............. X-RAY EXAM OF HEEL..... Radiologic examination of
the heel.
73660............. X-RAY EXAM OF TOE(S)... Radiologic examination of
the toe(s).
73700............. CT LOWER EXTREMITY W/O CT scan of leg without dye.
DYE.
73718............. MRI LOWER EXTREMITY W/O MRI of leg without dye.
DYE.
73721............. MRI JNT OF LWR EXTRE W/ MRI of lower extremity
O DYE. joint (knee/ankle) without
dye.
73722............. MRI JOINT OF LWR EXTR W/ MRI of lower extremity
DYE. joint (knee/ankle) with
dye.
73723............. MRI JOINT LWR EXTR W/ MRI of lower extremity
O&W/DYE. joint (knee/ankle) with
and without dye.
74022............. X-RAY EXAM SERIES Serial radiologic
ABDOMEN. examination of the
abdomen.
74150............. CT ABDOMEN W/O DYE..... CT of abdomen without dye.
74160............. CT ABDOMEN W/DYE....... CT of abdomen with dye.
74170............. CT ABDOMEN W/O & W/DYE. CT of abdomen with and
without dye.
74176............. CT ABD & PELVIS W/O CT of abdomen and pelvis
CONTRAST. without dye.
74177............. CT ABD & PELV W/ CT scan of abdomen and
CONTRAST. pelvis with contrast.
74178............. CT ABD & PELV 1/> REGNS Computed tomography,
abdomen and pelvis;
without contrast material
in one or both body
regions, followed by
contrast material(s) and
further sections in one or
both body regions.
74181............. MRI ABDOMEN W/O DYE.... MRI of abdomen without dye.
74183............. MRI ABDOMEN W/O & W/DYE MRI of abdomen without and
with dye.
76000............. CHEST X-RAY............ Flouroscopy, or x-ray
``movie'' that takes less
than an hour.
76001............. CHEST X-RAY............ Flouroscopy, or x-ray
``movie'' that takes more
than an hour.
76512............. OPHTH US B W/NON-QUANT Ultrasound of the eye.
A.
76514............. ECHO EXAM OF EYE A diagnostic procedure that
THICKNESS. allows a provider to see
the organs and other
structures in the abdomen.
76536............. US EXAM OF HEAD AND Ultrasound of head and
NECK. neck.
76642............. ULTRASOUND BREAST Limited ultrasound of the
LIMITED. breast.
76700............. US EXAM ABDOM COMPLETE. Ultrasound of abdomen with
all areas scanned.
76705............. ECHO EXAM OF ABDOMEN... A diagnostic procedure that
allows a provider to see
the organs and other
structures in the abdomen.
76770............. US EXAM ABDO BACK WALL Ultrasound of back wall of
COMP. the abdomen with all areas
viewed.
76775............. US EXAM ABDO BACK WALL Ultrasound of back wall of
LIM. the abdomen with limited
areas viewed.
76801............. OB US < 14 WKS SINGLE Abdominal ultrasound of
FETUS. pregnant uterus (less than
14 weeks) single or first
fetus.
76805............. OB US >/= 14 WKS SNGL Abdominal ultrasound of
FETUS. pregnant uterus (greater
or equal to 14 weeks 0
days) single or first
fetus.
76811............. OB US DETAILED SNGL Ultrasound of single fetus.
FETUS.
76813............. OB US NUCHAL MEAS 1 Evaluation through
GEST. measurement of fetal
nuchal translucency.
76815............. OB US LIMITED FETUS(S). Ultrasound of fetus with
limited views.
76817............. TRANSVAGINAL US Transvaginal ultrasound of
OBSTETRIC. uterus.
76818............. FETAL BIOPHYS PROFILE W/ Fetal biophysical profile
NST. with non-stress test.
76819............. FETAL BIOPHYS PROFIL W/ Fetal biophysical profile
O NST. without non-stress test.
76830............. TRANSVAGINAL US NON-OB. Ultrasound of the pelvis
through vagina.
76831............. ECHO EXAM UTERUS....... A diagnostic procedure that
allows a provider to see
the uterus.
76856............. US EXAM PELVIC COMPLETE Complete ultrasound of the
pelvis.
[[Page 72186]]
76857............. US EXAM PELVIC LIMITED. Limited ultrasound of the
pelvis.
76870............. US EXAM SCROTUM........ Ultrasound of the scrotum.
76872............. US TRANSRECTAL......... Transrectal ultrasound.
76882............. US LMTD JT/NONVASC XTR Diagnostic ultrasound of an
STRUX. extremity excluding the
bone, joints or vessels.
77047............. MRI BOTH BREASTS....... Magnetic resonance imaging,
breasts, without contrast
material; bilateral.
77065............. DX MAMMO INCL CAD UNI.. Mammography of one breast.
77066............. DX MAMMO INCL CAD BI... Mammography of both
breasts.
77067............. SCR MAMMO BI INCL CAD.. Mammography of both breasts-
2 or more views.
77080............. BONE DENSITY STUDY OF Scan to measure bone
SPINE OR PELVIS. mineral density (BMD) at
the spine and hip.
77385............. Ntsty modul rad tx dlvr Radiation therapy delivery.
smpl.
77386............. Ntsty modul rad tx dlvr Radiation therapy delivery.
cplx.
77387............. Guidance for radia tx Guidance for localization
dlvr. of target delivery of
radiation treatment
delivery.
77412............. Radiation treatment Radiation treatment
delivery. delivery.
78014............. THYROID IMAGING W/BLOOD Scan using a radioactive
FLOW. medication
(radiopharmaceutical) to
take pictures or images of
the thyroid gland.
78306............. BONE IMAGING WHOLE BODY A procedure most commonly
ordered to detect areas of
abnormal bone growth due
to fractures, tumors,
infection, or other bone
issues.
78452............. HT MUSCLE IMAGE SPECT Image of the heart to
MULT. assess perfusion.
78815............. PET IMAGE W/CT SKULL- Tumor imaging, positron
THIGH. emission tomography (PET)
with concurrently acquired
computed tomography (CT)
for attenuation correction
and anatomical
localization.
80048............. METABOLIC PANEL TOTAL Basic metabolic panel.
CA.
80050............. GENERAL HEALTH PANEL... General health panel.
80051............. Blood test panel for .
electrolytes (sodium
potassium, chloride,
carbon dioxide).
80053............. COMPREHEN METABOLIC Blood test, comprehensive
PANEL. group of blood chemicals.
80055............. OBSTETRIC PANEL........ Obstetric blood test panel.
80061............. LIPID PANEL............ Blood test, lipids
(cholesterol and
triglycerides).
80069............. RENAL FUNCTION PANEL... Kidney function panel test.
80074............. ACUTE HEPATITIS PANEL.. Acute hepatitis panel.
80076............. HEPATIC FUNCTION PANEL. Liver function blood test
panel.
80081............. Blood test panel for .
obstetrics (cbc,
differential wbc
count, hepatitis b,
hiv, rubella,
syphilis, antibody
screening, rbc, blood
typing).
80197............. ASSAY OF TACROLIMUS.... Test is used to measure the
amount of the drug in the
blood to determine whether
the concentration has
reached a therapeutic
level and is below the
toxic level.
80307............. Drug test prsmv chem Testing for presence of
anlyzr. drug.
81000............. URINALYSIS NONAUTO W/ Manual urinalysis test with
SCOPE. examination using
microscope.
81001............. URINALYSIS; MANUAL OR Manual urinalysis test with
AUTO WITH OR WITHOUT examination with or
MICROSCOPY. without using microscope.
81002............. URINALYSIS NONAUTO W/O Manual urinalysis test with
SCOPE. examination without using
microscope.
81003............. URINALYSIS; MANUAL OR Automated urinalysis test.
AUTO WITH OR WITHOUT
MICROSCOPY.
81025............. URINE PREGNANCY TEST... Urine pregnancy test.
82043............. UR ALBUMIN QUANTITATIVE Urine test to measure
albumin.
82044............. UR ALBUMIN Urine test to measure
SEMIQUANTITATIVE. albumin-semiquantitative.
82248............. BILIRUBIN DIRECT....... Measurement of direct
bilirubin.
82306............. VITAMIN D 25 HYDROXY... Blood test to monitor
vitamin D levels.
82553............. CREATINE MB FRACTION... Blood test to detect heart
enzymes.
82570............. ASSAY OF URINE Test to measure creatinine
CREATININE. in the urine.
82607............. VITAMIN B-12........... Blood test to measure B-12.
82627............. DEHYDROEPIANDROSTERONE. Blood test to measure an
enzyme in the blood.
82670............. ASSAY OF ESTRADIOL..... Blood test to measure a
type of estrogen in the
blood.
82728............. ASSAY OF FERRITIN...... Test to determine level of
iron in the blood.
82784............. ASSAY IGA/IGD/IGG/IGM Test to determine levels of
EACH. immunoglobulins in the
blood.
82803............. BLOOD GASES ANY Test to measure arterial
COMBINATION. blood gases.
82947............. ASSAY GLUCOSE BLOOD Quantitative measure of
QUANT. glucose build up in the
blood over time.
82950............. GLUCOSE TEST........... Test of glucose level in
the blood.
82951............. GLUCOSE TOLERANCE TEST. Test to predict likelihood
of gestational diabetes.
83001............. ASSAY OF GONADOTROPIN Test of hormone in the
(FSH). blood.
83002............. ASSAY OF GONADOTROPIN Test of hormone in the
(LH). blood.
83013............. H PYLORI (C-13) BREATH. Test of breath for a
stomach bacterium.
83036............. GLYCOSYLATED HEMOGLOBIN Blood test to measure
TEST. average blood glucose
levels for past 2-3
months.
83516............. IMMUNOASSAY NONANTIBODY Chemical test of the blood
to measure presence or
concentration of a
substance in the blood.
83540............. ASSAY OF IRON.......... Blood test to measure the
amount of iron that is in
transit in the body.
83550............. IRON BINDING TEST...... Blood test that measures
the amount of iron carried
in the blood.
83655............. ASSAY OF LEAD.......... Blood test to determine the
concentration of lead in
the blood.
83718............. ASSAY OF LIPOPROTEIN... Blood test to measure the
level of lipoproteins in
the blood.
83880............. ASSAY OF NATRIURETIC Blood test used to diagnose
PEPTIDE. heart failure.
[[Page 72187]]
84134............. ASSAY OF PREALBUMIN.... Blood test to measure level
of prealbumin.
84153............. ASSAY OF PSA TOTAL..... PSA (prostate specific
antigen).
84154............. PSA (prostate specific .
antigen) measurement.
84436............. ASSAY OF TOTAL Blood test to measure a
THYROXINE. type of thyroid hormone.
84439............. ASSAY OF FREE THYROXINE Blood test to evaluate
thyroid function.
84443............. ASSAY THYROID STIM Blood test, thyroid
HORMONE. stimulating hormone (TSH).
84460............. ALANINE AMINO (ALT) Blood test to evaluate
(SGPT). liver function.
84480............. ASSAY TRIIODOTHYRONINE Blood test to evaluate
(T3). thyroid function.
84484............. ASSAY OF TROPONIN QUANT Blood test to measure a
certain protein in the
blood to determine heart
muscle damage.
84703............. CHORIONIC GONADOTROPIN Blood test to assess for
ASSAY. pregnancy.
85007............. BL SMEAR W/DIFF WBC Blood test to assess for
COUNT. infection.
85018............. HEMOGLOBIN............. Blood test to measure
levels of hemoglobin.
85025............. COMPLETE CBC W/AUTO Complete blood cell count,
DIFF WBC. with differential white
blood cells, automated.
85027............. COMPLETE CBC AUTOMATED. Complete blood count,
automated.
85610............. PROTHROMBIN TIME....... Blood test, clotting time.
85730............. THROMBOPLASTIN TIME Coagulation assessment
PARTIAL. blood test.
86039............. ANTINUCLEAR ANTIBODIES Blood test to determine
(ANA). autoimmune disorders.
86147............. CARDIOLIPIN ANTIBODY EA Blood test to determine
IG. cause of inappropriate
blood clot formation.
86200............. CCP ANTIBODY........... Blood test to diagnose
rheumatoid arthritis.
86300............. IMMUNOASSAY TUMOR CA 15- Blood test to monitor
3. breast cancer.
86304............. IMMUNOASSAY TUMOR CA Blood test to monitor for
125. cancer.
86336............. INHIBIN A.............. Blood test to monitor for
cancer in the ovaries or
testis.
86592............. SYPHILIS TEST NON-TREP Blood test to screen for
QUAL. syphilis.
86644............. CMV ANTIBODY........... Blood test to monitor for
cytomegalovirus.
86665............. EPSTEIN-BARR CAPSID VCA Blood test to diagnose
mononucleosis.
86677............. HELICOBACTER PYLORI Blood test to if peptic
ANTIBODY. ulcers are caused by a
certain bacterium.
86703............. HIV-1/HIV-2 1 RESULT Blood test to diagnose HIV.
ANTBDY.
86704............. HEP B CORE ANTIBODY Blood test indicating
TOTAL. infection with Hepatitis
B.
86708............. HEPATITIS A ANTIBODY... Blood test indicating
infection with Hepatitis
A.
86762............. RUBELLA ANTIBODY....... Blood test to determine if
antibodies exist for
rubella.
86765............. RUBEOLA ANTIBODY....... Blood test to determine if
antibodies exist for
measles.
86780............. TREPONEMA PALLIDUM..... Blood test to determine
existence of certain
bacterium that causes
syphilis.
86803............. HEPATITIS C AB TEST.... Blood test to determine
infection with Hepatitis
C.
86850............. RBC ANTIBODY SCREEN.... Blood test to screen for
antibodies that could harm
red blood cells.
87040............. BLOOD CULTURE FOR Blood test to screen for
BACTERIA. bacteria in the blood.
87046............. STOOL CULTR AEROBIC Blood test to identify
BACT EA. bacteria that may be
contributing to symptoms
in the gastrointestinal
tract.
87070............. CULTURE OTHR SPECIMN Test of body fluid other
AEROBIC. than blood to assess for
bacteria.
87077............. CULTURE AEROBIC Test of a wound for type of
IDENTIFY. bacterial infection.
87081............. CULTURE SCREEN ONLY.... Medical test to find an
infection.
87086............. URINE CULTURE/COLONY Culture of the urine to
COUNT. determine number of
bacteria.
87088............. URINE BACTERIA CULTURE. Culture of the urine to
determine bacterial
infection.
87101............. SKIN FUNGI CULTURE..... A procedure used to
determine if fungi are
present in an area of the
body.
87186............. MICROBE SUSCEPTIBLE MIC A test used to determine
which medications work on
bacteria for fungi.
87205............. SMEAR GRAM STAIN....... A lab test used to detect
bacteria or fungi in a
sample taken from the site
of a suspected infection.
87210............. SMEAR WET MOUNT SALINE/ A lab test to screen for
INK. evidence of vaginal
infection.
87324............. CLOSTRIDIUM AG IA...... A test of the stool to
diagnose Clostridium
difficile (C. diff)
infection.
87389............. HIV-1 AG W/HIV-1 & HIV- Test for HIV.
2 AB.
87491............. CHYLMD TRACH DNA AMP Test that detects
PROBE. Chlamydia.
87510............. GARDNER VAG DNA DIR Blood test for vaginitis.
PROBE.
87591............. N.GONORRHOEAE DNA AMP Blood test for an STD.
PROB.
87624............. Hpv high-risk types.... Detection test for human
papillomavirus (hpv).
87653............. STREP B DNA AMP PROBE.. Blood test for strep
infection.
87661............. TRICHOMONAS VAGINALIS Blood test for an STD.
AMPLIF.
87801............. DETECT AGNT MULT DNA Blood test to determine
AMPLI. genetic material of
certain infectious agents.
87804............. INFLUENZA ASSAY W/OPTIC Flu test.
87807............. RSV ASSAY W/OPTIC...... Test for RSV.
87880............. STREP A ASSAY W/OPTIC.. Test for strep A.
88112............. CYTOPATH CELL ENHANCE Urine test.
TECH.
88141............. CYTOPATH C/V INTERPRET. Cervical cancer screening
test with interpretation.
88142............. CYTOPATH C/V THIN LAYER PAP smear.
88150............. CYTOPATH C/V MANUAL.... Cervical cancer screening
test done manually.
88175............. CYTOPATH C/V AUTO FLUID PAP smear.
REDO.
88305............. TISSUE EXAM BY Test of tissues for
PATHOLOGIST. diagnosis of
abnormalities.
88312............. SPECIAL STAINS GROUP 1. Blood test to assist with
diagnosis.
88313............. SPECIAL STAINS GROUP 2. Blood test to assist with
diagnosis.
88342............. IMMUNOHISTO ANTB 1ST Pathology test.
STAIN.
90460............. IM ADMIN 1ST/ONLY Immunization administration
COMPONENT. in children <18.
90471............. IMMUNIZATION ADMIN..... Immunization administration
by a medical assistant or
nurse.
[[Page 72188]]
90474............. IMMUNE ADMIN ORAL/NASAL Immunization administered
ADDL. orally or nasally.
90632............. HEPA VACCINE ADULT IM.. Hepatitis A vaccination for
adults.
90633............. HEPA VACC PED/ADOL 2 Hepatitis A vaccination for
DOSE IM. adolescents and children.
90649............. 4VHPV VACCINE 3 DOSE IM 3-dose HPV vaccination.
90656............. IIV3 VACC NO PRSV 0.5 Flu shot-high dose for 2019-
ML IM. 2020 flu season given by
injection.
90658............. IIV3 VACCINE SPLT 0.5 Preservative free flu
ML IM. vaccine.
90672............. LAIV4 VACCINE Nasal flu vaccine.
INTRANASAL.
90681............. RV1 VACC 2 DOSE LIVE Rotavirus vaccination.
ORAL.
90686............. IIV4 VACC NO PRSV 0.5 Flu shot-high dose for 2019-
ML IM. 2020 flu season given by
injection for people >65.
90707............. MMR VACCINE SC......... Measles, mumps, and rubella
vaccine.
90710............. MMRV VACCINE SC........ Measles, mumps, rubella,
and varicella vaccine.
90715............. TDAP VACCINE 7 YRS/> IM Diphtheria, tetanus
acellular, and pertussis
vaccine for adults.
90716............. VAR VACCINE LIVE SUBQ.. Varicella vaccine.
90732............. PPSV23 VACC 2 YRS+ SUBQ/ pneumococcal vaccine.
IM.
90734............. MENACWYD/MENACWYCRM meningococcal conjugate
VACC IM. vaccine.
90736............. HZV VACCINE LIVE SUBQ.. Shingles vaccine.
90746............. HEPB VACCINE 3 DOSE Hepatitis B vaccine.
ADULT IM.
90791............. PSYCH DIAGNOSTIC A diagnostic tool employed
EVALUATION. by a psychiatrist to
diagnose problems with
memory, thought processes,
and behaviors.
90792............. PSYCH DIAG EVAL W/MED A diagnostic tool employed
SRVCS. by a psychiatrist to
determine if medications
are needed.
90832............. PSYTX W PT 30 MINUTES.. Psychotherapy, 30 min.
90833............. PSYTX W PT W E/M 30 MIN Psychotherapy, 30 minutes
with patient when
performed with an
evaluation and management
service.
90834............. PSYTX W PT 45 MINUTES.. Psychotherapy, 45 min.
90836............. PSYTX W PT W E/M 45 MIN Psychotherapy, 45 minutes
with patient when
performed with an
evaluation and management
service.
90837............. PSYTX W PT 60 MINUTES.. Psychotherapy, 60 min.
90838............. Psychotherapy, 60 ...........................
minutes.
90839............. Psychotherapy for ...........................
crisis, first 60
minutes.
90840............. Psychotherapy for ...........................
crisis.
90846............. Family psychotherapy, Family psychotherapy, not
50 minutes. including patient, 50 min.
90847............. FAMILY PSYTX W/PT 50 Family psychotherapy,
MIN. including patient, 50 min.
90853............. GROUP PSYCHOTHERAPY.... Group psychotherapy.
92002............. EYE EXAM NEW PATIENT... Intermediate exam.
92004............. EYE EXAM NEW PATIENT... Complete exam.
92012............. EYE EXAM ESTABLISH Eye exam on an established
PATIENT. patient.
92014............. EYE EXAM&TX ESTAB PT 1/ Eye exam and treatment for
>VST. established patient.
92083............. VISUAL FIELD An eye examination that can
EXAMINATION(S). detect dysfunction in
central and peripheral
vision.
92133............. CMPTR OPHTH IMG OPTIC Optic nerve imaging.
NERVE.
92507............. SPEECH/HEARING THERAPY. Therapy for speech or
hearing.
92523............. SPEECH SOUND LANG Evaluation of speech sound
COMPREHEN. production with evaluation
of language comprehension.
92552............. PURE TONE AUDIOMETRY Type of hearing test.
AIR.
93000............. ELECTROCARDIOGRAM Routine EKG using at least
COMPLETE. 12 leads including
interpretation and report.
93015............. CARDIOVASCULAR STRESS Test to determine heart
TEST. abnormalities.
93303............. ECHO TRANSTHORACIC..... Test to screen the heart
for abnormalities.
93306............. Tte w/doppler complete. Ultrasound examination of
heart including color-
depicted blood flow rate,
direction, and valve
function.
93307............. TTE W/O DOPPLER Echo without doppler study.
COMPLETE.
93320............. DOPPLER ECHO EXAM HEART Echo with doppler.
93350............. STRESS TTE ONLY........ Stress test with
echocardiogram.
93452............. Cardiac Catheterization Insertion of catheter into
left heart for diagnosis.
93798............. CARDIAC REHAB/MONITOR.. Use of EKG to monitor
cardiac rehabilitation.
93880............. EXTRACRANIAL BILAT Study of vessels on both
STUDY. sides of the head and
neck.
93922............. UPR/L XTREMITY ART 2 Limited bilateral
LEVELS. noninvasive physiologic
studies of upper or lower
extremity arteries.
93970............. EXTREMITY STUDY........ Complete bilateral study of
the extremities.
93971............. EXTREMITY STUDY........ One sided or limited
bilateral study.
94010............. BREATHING CAPACITY TEST Test to determine how well
oxygen moves from the
lungs to the blood stream.
94060............. EVALUATION OF WHEEZING. Test to determine if
wheezing is present.
94375............. RESPIRATORY FLOW VOLUME Graphical representation of
LOOP. inspiration and
expiration.
94726............. PULM FUNCT TST Measures how much air is in
PLETHYSMOGRAP. the lungs after taking a
deep breath.
94727............. PULM FUNCTION TEST BY Measure of lung function
GAS. and gas exchange.
94729............. CO/MEMBANE DIFFUSE Test to measure how well
CAPACITY. gases diffuse across lung
surfaces.
95004............. PERCUT ALLERGY SKIN Allergy test.
TESTS.
95115............. IMMUNOTHERAPY ONE Allergy shot-1 shot.
INJECTION.
95117............. IMMUNOTHERAPY Multiple allergy shots.
INJECTIONS.
95810............. POLYSOM 6/> YRS 4/> Sleep monitoring of patient
PARAM. (6 years or older) in
sleep lab.
[[Page 72189]]
95811............. POLYSOM 6/>YRS CPAP 4/> Sleep monitoring of patient
PARM. (6 years or older) in
sleep lab using CPAP.
95860............. MUSCLE TEST ONE LIMB... Test to measure electrical
activity of muscles or
nerves in 1 limb.
95861............. MUSCLE TEST 2 LIMBS.... Test to measure electrical
activity of muscles or
nerves in 2 limb.
95886............. MUSC TEST DONE W/N TEST Test to assess for nerve
COMP. damage.
96110............. DEVELOPMENTAL SCREEN W/ Childhood test to screen
SCORE. for developmental
disabilities.
96365............. THER/PROPH/DIAG IV INF Intravenous infusion, for
INIT. therapy, prophylaxis, or
diagnosis-initial
infusion.
96366............. THER/PROPH/DIAG IV INF Intravenous infusion, for
ADDON. therapy, prophylaxis, or
diagnosis-additional
infusions.
96374............. THER/PROPH/DIAG INJ IV Intravenous infusion, for
PUSH. therapy, prophylaxis, or
diagnosis-IV push.
96375............. TX/PRO/DX INJ NEW DRUG Intravenous infusion, for
ADDON. treatment, prophylaxis, or
diagnosis-new drug add on.
96376............. TX/PRO/DX INJ SAME DRUG Intravenous infusion, for
ADON. treatment, prophylaxis, or
diagnosis-same drug add
on.
96415............. CHEMO IV INFUSION ADDL Chemotherapy infusion-each
HR. additional hour.
96417............. CHEMO IV INFUS EACH Chemotherapy infusion-
ADDL SEQ. additional IV pushes of
the same medication.
97010............. HOT OR COLD PACKS Use of external hot or cold
THERAPY. packs.
97012............. MECHANICAL TRACTION Form of decompression
THERAPY. therapy of the spine.
97014............. ELECTRIC STIMULATION One time use unattended.
THERAPY.
97016............. VASOPNEUMATIC DEVICE Machines designed to pump
THERAPY. cold water into an
inflatable wrap or brace,
compressing the enveloped
area of the body.
97026............. INFRARED THERAPY....... Light-based method to treat
pain and inflammation.
97032............. ELECTRICAL STIMULATION. Repeated application to one
or more parts of the body.
97033............. ELECTRIC CURRENT Psychiatric treatment in
THERAPY. which seizures are
electrically induced in
patients to provide relief
from mental disorders.
97035............. ULTRASOUND THERAPY..... Use of sound waves to treat
medical problems,
especially musculoskeletal
problems like inflammation
from injuries.
97110............. THERAPEUTIC EXERCISES.. Therapeutic exercise to
develop strength,
endurance, range of
motion, and flexibility,
each 15 minutes.
97112............. NEUROMUSCULAR A technique used by
REEDUCATION. physical therapists to
restore normal body
movement patterns.
97113............. AQUATIC THERAPY/ Use of water for therapy/
EXERCISES. exercises.
97116............. GAIT TRAINING THERAPY.. A type of physical therapy.
97124............. MASSAGE THERAPY........ Use of massage.
97140............. MANUAL THERAPY 1/> Manipulation of 1 or more
REGIONS. regions of the body.
97530............. THERAPEUTIC ACTIVITIES. Incorporates the use of
multiple parameters, such
as balance, strength, and
range of motion, for a
functional activity.
97535............. SELF CARE MNGMENT Occupational therapy.
TRAINING.
97597............. RMVL DEVITAL TIS 20 CM/ Debridement (for example,
<. high pressure waterjet
with/without suction,
sharp selective
debridement with scissors,
scalpel, and forceps).
97811............. ACUPUNCT W/O STIMUL Acupuncture without
ADDL 15M. stimulation.
97813............. ACUPUNCT W/STIMUL 15 Acupuncture with
MIN. stimulation.
98940............. CHIROPRACT MANJ 1-2 Chiropractic manipulation
REGIONS. in 1-2 regions.
98941............. CHIROPRACT MANJ 3-4 Chiropractic manipulation
REGIONS. in 3-4 regions.
98943............. CHIROPRACT MANJ Chiropractic manipulation
XTRSPINL 1/>. not of the spine.
98966............. Hc pro phone call 5-10 Telephone assessment and
min. management service, 5-10
minutes of medical
discussion.
98967............. Hc pro phone call 11-20 Telephone assessment and
min. management service, 11-20
minutes of medical
discussion.
98968............. Hc pro phone call 21-30 Telephone assessment and
min. management service, 21-30
minutes of medical
discussion.
98970............. Qualified non physician Qualified non physician
health care health care professional
professional online online digital assessment
digital assessment and and management, for an
management est. established patient, for
patient 5-10 minutes. up to 7 days, cumulative
time during the 7 days; 5-
10 minutes.
98971............. Qualified non physician Qualified non physician
health care health care professional
professional online online digital assessment
digital assessment and and management, for an
management est. established patient, for
patient 11-20 minutes. up to 7 days, cumulative
time during the 7 days; 11-
20 minutes.
98972............. Qualified non physician Qualified non physician
health care health care professional
professional online online digital assessment
digital assessment and and management, for an
management for est. established patient, for
patients 21+ minutes. up to 7 days, cumulative
time during the 7 days; 21
or more minutes.
99051............. MED SERV EVE/WKEND/ Medical service during off-
HOLIDAY. hours.
99173............. VISUAL ACUITY SCREEN... Eye test.
99201............. OFFICE/OUTPATIENT VISIT New patient office or other
NEW. outpatient visit,
typically 10 minutes.
99202............. OFFICE/OUTPATIENT VISIT New patient office or other
NEW. outpatient visit,
typically 20 minutes.
99203............. OFFICE/OUTPATIENT VISIT New patient office or other
NEW. outpatient visit,
typically 30 min.
99204............. OFFICE/OUTPATIENT VISIT New patient office of other
NEW. outpatient visit,
typically 45 min.
99205............. OFFICE/OUTPATIENT VISIT New patient office of other
NEW. outpatient visit,
typically 60 min.
99211............. OFFICE/OUTPATIENT VISIT Outpatient visit of
EST. established patient not
requiring a physician.
99212............. OFFICE/OUTPATIENT VISIT Outpatient visit of
EST. established patient
requiring a physician.
99213............. OFFICE/OUTPATIENT VISIT Established patient office
EST. or other outpatient visit,
typically 15 minutes.
99214............. OFFICE/OUTPATIENT VISIT Established patient office
EST. or other outpatient visit,
typically 25 minutes.
99215............. OFFICE/OUTPATIENT VISIT Established patient office
EST. or other outpatient, visit
typically 40 minutes.
99243............. OFFICE CONSULTATION.... Patient office
consultation, typically 40
min.
[[Page 72190]]
99244............. OFFICE CONSULTATION.... Patient office
consultation, typically 60
min.
99283............. Emergency dept visit... Emergency department visit,
moderately severe problem.
99284............. Emergency dept visit... Emergency department visit,
problem of high severity.
99285............. Emergency dept visit... Emergency department visit,
problem with significant
threat to life or
function.
99381............. INIT PM E/M NEW PAT Initial visit for an
INFANT. infant.
99382............. INIT PM E/M NEW PAT 1-4 Initial visit for new
YRS. patients 1-4 years old.
99383............. PREV VISIT NEW AGE 5-11 New preventative visit in
new patients 5-11 years
old.
99384............. PREV VISIT NEW AGE 12- New preventative visit in
17. new patients 12-17 years
old.
99385............. PREV VISIT NEW AGE 18- Initial new patient
39. preventive medicine
evaluation (18-39 years).
99386............. PREV VISIT NEW AGE 40- Initial new patient
64. preventive medicine
evaluation (40-64 years).
99387............. INIT PM E/M NEW PAT 65+ Initial visit for new
YRS. patients 65 and older
years old.
99391............. PER PM REEVAL EST PAT Periodic primary re-
INFANT. evaluation for an
established infant
patient.
99392............. PREV VISIT EST AGE 1-4. Initial visit for new
patients 1-4 years old.
99393............. PREV VISIT EST AGE 5-11 New preventative visit in
new patients 5-11 years
old.
99394............. PREV VISIT EST AGE 12- New preventative visit in
17. new patients 12-17 years
old.
99395............. PREV VISIT EST AGE 18- Established patient
39. periodic preventive
medicine examination age
18-39 years.
99396............. PREV VISIT EST AGE 40- Established patient
64. periodic preventive
medicine examination age
40-64 years.
99397............. PER PM REEVAL EST PAT Periodic primary re-
65+ YR. evaluation for an
established patient 65 and
older.
99421............. ONLINE DIGITAL Online digital evaluation
EVALUATION AND and management service,
MANAGEMENT SERVICE; 5- for an established
10 MINUTES. patient, for up to 7 days,
cumulative time during the
7 days; 5-10 minutes.
99422............. Online digital Online digital evaluation
evaluation and and management service,
management service; 11- for an established
20 minutes. patient, for up to 7 days,
cumulative time during the
7 days; 11-20 minutes.
99441............. Phone e/m phys/qhp 5-10 Physician telephone patient
min. service, 5-10 minutes of
medical discussion.
99442............. Phone e/m phys/qhp 11- Physician telephone patient
20 min. service, 11-20 minutes of
medical discussion.
99443............. Phone e/m phys/qhp 21- Physician telephone patient
30 min. service, 21-30 minutes of
medical discussion.
------------------------------------------------------------------------
As outlined above, below are the five codes that appear on the
commenter list of recommended items and services that are not being
required for the initial list of 500 items and services.
------------------------------------------------------------------------
Commenter codes not used Reason for removal
------------------------------------------------------------------------
10022.................................... Code Retired.
11100.................................... Code Retired.
11101.................................... Code Retired.
77059.................................... Code Retired.
A288..................................... Code Retired.
------------------------------------------------------------------------
The Departments understand that plans and issuers may use different
billing codes (for example, MS-DRGs vs. APR DRGs). Therefore, in the
first year of the implementation of the self-service tool, when plans
and issuers are required to provide cost estimates for the 500 items
and services identified by the Departments, plans and issuers are
permitted to make appropriate code substitutions as necessary to allow
them to disclose cost-sharing information for the 500 items and
services through the self-service tool. If necessary, the Departments
will issue future guidance regarding standards for code substitutions.
a. First Content Element: Estimated Cost-Sharing Liability
The first content element that plans and issuers are required to
disclose under the final rules is an estimate of the cost-sharing
liability for the furnishing of a covered item or service by a
particular provider or providers. The calculation of the cost-sharing
liability estimate is required to be computed based on the other
relevant cost-sharing information that plans and issuers are required
to disclose, as described later in this section of this preamble.
The proposed rules defined ``cost-sharing liability'' as the amount
a participant, beneficiary, or enrollee is responsible for paying for a
covered item or service under the terms of the plan or coverage. The
disclosure must include all applicable forms of cost sharing, including
deductibles, coinsurance requirements, and copayments. The term cost-
sharing liability does not include premiums, any applicable balance
billing amounts charged by out-of-network providers, or the cost of
non-covered items or services. For QHPs offered through Exchanges, an
estimate of cost-sharing liability for a requested covered item or
service provided must reflect any cost-sharing reductions the
individual would receive under the coverage.
Many commenters supported the disclosure of cost-sharing liability
for a particular item or service. One stated that providing cost-
sharing amounts to consumers in advance of receiving a service would
likely make it easier for providers to collect consumers' cost-sharing
amounts. However, some commenters were concerned that information
provided in advance of care would not provide an accurate estimate of
actual participant, beneficiary, or enrollee liability, which would
lead to consumer confusion and frustration. A few commenters requested
that the tool include additional information, such as all providers
expected to be involved in providing an item or service, and the price
of items and services historically provided along with that particular
item or service by the provider. Some commenters urged the Departments
to ensure appropriate educational information is provided to patients
to help them better understand and navigate the information being
displayed. Others recommended a federally funded and coordinated
outreach and education campaign to encourage the use of price
transparency tools and help patients understand the complexities of
health care prices. One commenter urged the Departments to clarify
that, to the extent that the actual services provided are consistent
with those provided under the estimate, plans would not be permitted to
hold an enrollee responsible for more than what was provided under the
estimate.
The Departments underscore that the estimates required by the final
rules are
[[Page 72191]]
not required to reflect the actual or final cost of a particular item
or service. Unforeseen factors during the course of treatment (which
may involve additional services or providers) can result in higher
actual cost-sharing liability following receipt of care than the
estimate provided in advance. Nonetheless, the Departments are
finalizing the requirement that cost-sharing liability estimates be
built upon accurate information, including the relevant cost-sharing
information described in 26 CFR 54.9815-2715A2(b)(1)(ii)-(iv), 29 CFR
2590.715-2715A2(b)(1)(ii)-(iv), and 45 CFR 147.211(b)(1)(ii)-(iv).
However, this requirement does not mean that the estimates must reflect
the amount ultimately charged to a participant, beneficiary, or
enrollee. Instead, the estimate should reflect the amount a
participant, beneficiary, or enrollee would be expected to pay for the
covered item or service for which cost-sharing information is sought.
Thus, the final rules do not require the cost-sharing liability
estimate to include costs for unanticipated items or services the
individual could incur due to the severity of his or her illness or
injury, provider treatment decisions, or other unforeseen events.
Attendant notice requirements in 26 CFR 54.9815-2715A2(b)(1)(vii), 29
CFR 2590.715-2715A2(b)(1)(vii), and 45 CFR 147.211(b)(1)(vii) also
require inclusion of a statement that actual charges for the
participant's, beneficiary's, or enrollee's covered items and services
may be different from those described in a cost-sharing liability
estimate, depending on the actual items and services received at the
point of care.
Additionally, while the Departments acknowledge the value of not
allowing group health plans and health insurance issuers to impose
higher cost sharing than estimated, to the extent that the actual
services provided were consistent with those provided under the
estimate, the Departments are of the view that it would not be prudent
to hold plans and issuers liable to the exact estimate that is provided
through the tool, as cost-sharing obligations may ultimately vary from
the estimates provided in advance. Additionally, the Departments are
concerned that such a requirement could incentivize plans and issuers
to provide high estimates, rather than the most accurate estimates.
Commenters recommended the final rules provide plans and issuers
with the flexibility to apply a reasonable methodology for estimating
reliable out-of-pocket costs for a specific network provider, and
recommended that this methodology could include, but should not be
limited to, using current year negotiated rates, historical negotiated
rates, historical claims, or a combination of these data points. One
commenter urged the Departments to remove the proposed requirement that
cost-sharing liability information be calculated based on negotiated
rates, stating that this is not the methodology used by most existing
cost-estimate tools.
The Departments understand that plans and issuers with existing
cost-estimate tools may use advanced analytics in calculating cost-
sharing liability estimates. However, the Departments are of the view
that the most accurate estimates of cost-sharing liability should be
provided using the actual rates and fees upon which liability is
determined. It is the Departments' understanding that, while provider
reimbursement may be based on negotiated rates, plans and issuers do
not always calculate a consumer's liability using the negotiated rate
as defined in paragraph (a) of the proposed rules, such as in
capitation arrangements where the provider is reimbursed
retrospectively. Rather, some plans and issuers may determine a
participant's, beneficiary's, or enrollee's cost-sharing liability on a
contractually agreed upon underlying fee schedule between the provider
and the plan or issuer.
Therefore, the final rules require that cost-sharing liability for
a particular item or service be calculated based on in-network rates,
out-of-network allowed amounts, and individual-specific accumulators,
such as deductibles and out-of-pocket limits. However, the Departments
clarify that plans and issuers may incorporate additional metrics and
analytics beyond this minimum standard: For example, by using complex
historical analytics to predict total costs of items and services
available through a bundled payment arrangement. The Departments will
assess how additional useful information can be provided to consumers
in this area going forward.
Under the proposed rules, plans and issuers would be required to
provide participants, beneficiaries, and enrollees with cost-sharing
information for either a discrete item or service or for items or
services for a treatment or procedure for which the plan uses a bundled
payment arrangement, according to how the plan or issuer structures
payment for the item or service. Several commenters pointed out that
providing cost-sharing liability estimates for bundled payment
arrangements might introduce confusion as consumers may not realize
that billing and payment rates are different when items and services
are rendered individually versus as part of a bundled item or service.
Commenters stated that ultimately, patients would very likely receive
inaccurate or misleading estimates in a significant proportion of self-
service estimate requests. Similarly, several commenters sought
clarification regarding how plans and issuers that incorporate
innovative and cost-saving methods like reference-based pricing, value-
based insurance design, and direct primary care as part of their
services and plan designs would comply with the requirements of the
proposed rules.
The Departments recognize the variability in pricing structures and
plan designs for many plans and issuers. The Departments understand
that developers have demonstrated that formulas for unique pricing
models are already being incorporated into existing estimator tools.
The Departments further understand that while providing cost estimates
in advance for a plan or issuer that incorporates reference-based
reimbursement may be complex, it is still feasible to estimate such
costs. For example, plans or issuers could develop a method for
analyzing past claims of specific providers to look for patterns in
their payment rates from which to derive an accurate predictive
estimate in advance. In response to the Hospital Price Transparency
final rule, one hospital claims to have developed a tool that provides
cost estimates with 95 percent to 99 percent accuracy.\110\ While some
factors associated with the course of care are incorporated after
services are rendered, others, like gender or location, are known in
advance. Therefore, the Departments expect plans and issuers to provide
a reasonable estimate using information the plan or issuer knows about
the participant, beneficiary, or enrollee or the average participant,
beneficiary, or enrollee.
---------------------------------------------------------------------------
\110\ Meyer, H. ``Hospitals roll out online price estimators as
CMS presses for transparency.'' Modern Healthcare. June 23, 2018.
Available at https://www.modernhealthcare.com/article/20180623/NEWS/180629994/hospitals-roll-out-online-price-estimators-as-cms-presses-for-transparency.
---------------------------------------------------------------------------
The Departments again acknowledge that how a provider is reimbursed
does not necessarily indicate how a participant, beneficiary, or
enrollee will be billed. Specifically, as commenters explained, the
bundled payment arrangement as defined in the proposed rules may not
reflect the cost-sharing liability for which the consumer is liable.
For instance, if a provider is reimbursed in a bundled payment
arrangement for a surgical procedure that includes the surgery and pre-
and post-surgery office visits, but the
[[Page 72192]]
enrollee is billed a copayment for each office visit and coinsurance
for the surgical procedure, the enrollee should be able to obtain the
separate copayment liabilities for each of the office visits and the
surgical procedures, not one bundled charge. However, under this
example, if the individual is only responsible for one copayment that
includes all office visits and the surgical procedures, the plan or
issuer could provide the cost-sharing liability estimate for that
bundled payment arrangement.
Therefore, the final rules clarify that plans and issuers should
provide one overall cost-sharing liability estimate for a bundled
payment arrangement if that is the only cost sharing for which the
participant, beneficiary, or enrollee would be liable. However, if a
plan or issuer reimburses a provider under a bundled payment
arrangement for all covered items and services provided for a specific
treatment or procedure, but cost sharing is imposed separately for each
unique item and service included in the bundled payment, plans and
issuers should disclose the cost-sharing liability for those distinct
items and services to the participant, beneficiary, or enrollee. The
Departments also recognize that providing one estimate that includes
all items and services that are typically provided within an episode of
care may be consumer-friendly in some situations, even where the items
and services are not subject to a bundled payment arrangement.
Therefore, the final rules clarify that while plans and issuers are not
required to provide bundled estimates where the provider is not
reimbursed through a bundled payment arrangement, nothing prohibits
plans or issuers from providing bundled estimates in situations where
such estimates could be relevant to participants, beneficiaries, or
enrollees, as long as the plan or issuer also discloses information
about the relevant items or services individually, as required by the
final rules.
Plans and issuers should take a similar approach for plan designs
that incorporate alternative payment structures such as direct primary
care or other bundled or capitated payment arrangements. The
Departments understand that there are many unique plan designs and may
issue additional guidance to address specific questions from plans,
issuers, and enforcement entities regarding the requirements of the
final rules.
The Departments appreciate comments requesting education and
outreach to help ensure that participants, beneficiaries, and enrollees
know that these consumer tools exist and can understand the information
displayed. The Departments recognize that more than 94 percent of plans
and issuers recently surveyed already have some variation of an
internet self-service tool,\111\ yet another study noted that only 12
percent of participants, beneficiaries, or enrollees currently use the
tools available to them,\112\ which might suggest that there is an
opportunity for improved awareness and understanding of these tools.
However, the Departments are also of the view that plans and issuers
have their own incentives to provide quality customer service and know
what types of outreach and messaging would be most helpful to their
participants, beneficiaries, and enrollees. Therefore, the Departments
have decided not to institute specific outreach and education
requirements, but rather strongly encourage plans and issuers to
develop educational and outreach materials to promote awareness that
self-service tools exist, where to find them on the plan's or issuer's
website, how to use the tool, what, if any, further innovations above
the baseline standards that differentiates their tool from competitors,
and what additional information may be available. In addition, the
Departments are of the view that employers may want to conduct outreach
and education to encourage their employees to shop for lower-priced
services that may slow increases in employer-sponsored coverage
premiums.
---------------------------------------------------------------------------
\111\ Sharma A., Manning, R., and Mozenter, Z. ``Estimating the
Burden of the Proposed Transparency in Coverage Rule.'' Bates White
Economic Consulting. January 27, 2020. Available at: https://www.bateswhite.com/newsroom-insight-Transparency-in-Coverage-Rule.html.
\112\ See Mehrotra, A., Chernew, M., and Sinaiko, A. ``Promises
and Reality of Price Transparency.'' April 5, 2018. 14 N. Eng. J.
Med. 378. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
---------------------------------------------------------------------------
One commenter stated that the final rules should provide the
flexibility for health plans to display cost-sharing information either
as dollars or using some proxy variable that either conveys costs
relative to other providers or the cost-effectiveness of the providers
for a given items or service relative to their peers. Another commenter
recommended that cost estimates include both an average price and a
reasonable range of the possible prices that the treatment could cost.
Other commenters recommended the Departments allow cost estimates to be
provided as a range.
The Departments are of the view that cost-sharing averages and
ranges would not provide personalized and specific cost-sharing
information and therefore the final rules adopt, as proposed, the
provision that estimated cost-sharing liability be reflected as a
dollar amount. However, the Departments understand that providing an
estimated range could help consumers understand how their costs may
vary depending on the complexity of a procedure. In addition to
providing a cost-sharing estimate that is specific to the participant,
beneficiary, or enrollee, plans and issuers may also choose to provide
low and high ranges of what the consumer may expect to pay to reflect
other needed services, complications, and other factors.
Several commenters expressed concerns about the ability of plans
and issuers to provide these cost-sharing estimates, noting that few,
if any, currently provide this level of disclosure to participants,
beneficiaries, or enrollees before the incurrence of a claim.
Commenters stated that most major issuers have treatment cost
estimators available, but these tools are rudimentary and are not
necessarily available for all plan designs. Commenters also stated that
few regional issuers currently make any cost-estimation data available
and the vast majority of data provided via online tools currently
relies on estimated costs drawn from publicly available sources rather
than personal information and circumstances.
Another commenter stated that most self-insured group health plans
do not have easy access to all the data necessary to provide
beneficiaries with what they described as upfront adjudication of the
beneficiary's claim, like an EOB. One commenter expressed concern,
stating that plans could be subject to significant penalties for
failure to comply and highlighted that self-insured plans typically do
not establish their own networks, but rather contract with an issuer,
TPA or other entity for the use of their network. Another commenter
stated that issuers, preferred provider networks, and TPAs continue to
maintain network pricing information as confidential and proprietary,
even with respect to their own plan clients. Some commenters stated
that while the preamble to the proposed rules suggests that plans could
renegotiate their contracts in order to gain access to this proprietary
information, this ignores the realities of the market. These commenters
opined that, in the absence of clearer guidance applicable to issuers
and TPAs, plans and issuers will be burdened with trying to force
disclosure of this information.
The Departments are of the view that the ability to access cost-
sharing liability information in advance of
[[Page 72193]]
seeking care should not be limited by the participant's, beneficiary's,
or enrollee's plan or issuer type. The Departments are aware of several
issuers that provide advance cost estimates that are based on an
individual's specific information, such as out-of-pocket amount
accumulators. The intent of the final rules is to make this information
available to a larger number of participants, beneficiaries, and
enrollees, empowering them to shop for care that best meets their
needs.
Additionally, while the Departments recognize that some self-
insured group health plans (or TPAs acting on their behalf) may not
currently have access to the information that would be required to
calculate a participant's or beneficiary's cost liability, the
Departments do not foresee any barriers that would prohibit the plan or
TPA from obtaining this information. As discussed in the preamble to
the proposed rules, plans may have to amend existing contracts with
issuers, TPAs, or providers. Consistent with the discussion of legal
authority elsewhere in this preamble, even if a contract between a
self-insured plan and a TPA contains a provision prohibiting the public
disclosure of its terms, it is the Departments' understanding that such
contracts typically include exceptions where a particular disclosure is
required by Federal law, and Federal law would control over contractual
terms in any case.
In response to whether other types of information are necessary to
provide an estimate of cost-sharing liability prior to an individual's
receipt of items or services from a provider(s), one commenter
suggested--in order to enhance the usability and accuracy of these
data--that CMS and payers utilize the open-source episode grouper
maintained by the not-for-profit Patient-Centered Episode System
(PACES) Center, to create a single industry standard for defining
clinical episodes of care using current medical record and payment
systems and based on consensus across multiple stakeholders including
providers, payers, purchasers, and consumers.
While the Departments generally support standardization across the
complex health care ecosystem, there is no current required
standardization of items and services provided for certain common
episodes of care. Because of the lack of this particular standard,
requiring plans and issuers to use PACES or similar services to
determine costs will not accurately reflect what different plans and
issuers actually reimburse for different episodes of care.
The Departments acknowledge that section 2713 of the PHS Act
requires non-grandfathered group health plans and issuers offering non-
grandfathered coverage in the individual or group markets to provide
coverage without the imposition of any cost-sharing requirements for
select preventive items and services. However, if the same items or
services are furnished for non-preventive purposes, the participant,
beneficiary, or enrollee may be subject to the cost-sharing terms of
his or her plan. The Departments are of the view that if an item or
service will be furnished at no cost to the participant, beneficiary,
or enrollee, the participant, beneficiary, or enrollee should know this
information. One commenter expressed a desire that price transparency
not serve as a disincentive for individuals seeking preventive and
maintenance therapy services. The Departments are of the view that
clearly indicating when items and services have a $0 cost-sharing
liability may have the opposite effect--it may actually encourage
consumers to seek preventive care. The Departments understand that
determining whether an item or service is preventive or not for an
individual may be complex, and, indeed, may be impossible prior to
service. Therefore, to the extent an item or service is a recommended
preventive service under section 2713 of the PHS Act, and the plan or
issuer cannot determine whether the request is for preventive or non-
preventive purposes, the plan or issuer must display the non-preventive
cost-sharing liability in the internet-based self-service tool, along
with a statement that the item or service may not be subject to cost
sharing if it is billed as a preventive service. For example, if an
individual requests cost-sharing information for an in-network
colonoscopy, the plan should display the applicable cost-sharing
information for a diagnostic colonoscopy and a statement that the
service may not be subject to cost sharing if it is billed as a
preventive service from an in-network provider. As an alternative, a
plan or issuer may allow an individual to request cost-sharing
information for the specific preventive or non-preventive item or
service by including the appropriate terms such as ``preventive,''
``non-preventive,'' or ``diagnostic'' as a means to request the most
accurate cost-sharing information.
b. Second Content Element: Accumulated Amounts
The second content element is a participant's, beneficiary's, or
enrollee's accumulated amounts. The proposed rules defined
``accumulated amounts'' as the amount of financial responsibility that
a participant, beneficiary, or enrollee has incurred at the time the
request for cost-sharing information is made, with respect to a
deductible and/or an out-of-pocket limit. If an individual is enrolled
in other than self-only coverage, these accumulated amounts would
include the financial responsibility a participant, beneficiary, or
enrollee has incurred toward meeting his or her individual deductible
and/or out-of-pocket limit, as well as the amount of financial
responsibility that the individuals enrolled under the plan or coverage
have incurred toward meeting the other than self-only coverage
deductible and/or out-of-pocket limit, as applicable. The Departments
interpret section 2707(b) of the PHS Act as requiring non-grandfathered
group health plans to comply with the maximum out-of-pocket limit
promulgated under section 1302(c)(1) of PPACA, including the HHS
clarification that the self-only maximum out-of-pocket limit applies to
each individual, regardless of whether the individual is enrolled in
self-only coverage or in other than self-only coverage. Accordingly,
the self-only maximum out-of-pocket limit applies to an individual who
is enrolled in family coverage or other coverage that is not self-only
coverage under a group health plan.\113\ For this purpose, the
Departments proposed that accumulated amounts would include any expense
that counts toward the deductible or out-of-pocket limit (such as
copayments and coinsurance), but would exclude expenses that would not
count toward a deductible or out-of-pocket limit (such as premium
payments, out-of-pocket expenses for out-of-network services, or
amounts for items or services not covered under a plan or coverage).
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\113\ 80 FR 10750, 10824-10825 (Feb. 27, 2015); see also FAQs
About Affordable Care Act Implementation (Part XXVII), Q1. Available
at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ACA/-FAQs-Part-XXVII/-MOOP/-2706/-FINAL.pdf and https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-xxvii.pdf.
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Furthermore, to the extent a plan or issuer imposes a cumulative
treatment limitation on a particular covered item or service (such as a
limit on the number of items, days, units, visits, or hours covered in
a defined time period) independent of individual medical necessity
determinations, the accumulated amounts would also include the amount
that has accrued toward the limit on the item or service (such as the
number of items, days, units, visits, or hours the participant,
beneficiary, or enrollee has used).
[[Page 72194]]
As discussed in the proposed rules, the Departments understand that
independent of cumulative treatment limitations, cost-sharing liability
may vary by individual based on a determination of medical necessity
and that it may not be reasonable for a plan or issuer to account for
this variance as part of the accumulated amounts. Therefore, under the
final rules, plans and issuers are required to provide cost-sharing
information with respect to an accumulated amount for a cumulative
treatment limitation that reflects the status of the individual's
progress toward meeting the limitation, and this information does not
include any individual determination of medical necessity that may
affect coverage for the item or service. For example, if the terms of
an individual's plan or coverage limit coverage of physical therapy to
10 visits per plan or policy year, subject to a medical necessity
determination, and at the time the request for cost-sharing information
is made the individual has had claims paid for three physical therapy
visits, the plan or coverage would make cost-sharing information
disclosures based on the fact that the individual could be covered for
seven more physical therapy visits in that plan or policy year,
regardless of whether or not a determination of medical necessity for
future visits has been made at that time.
Several commenters supported the inclusion of the accumulated
amounts as one of the content elements. One commenter agreed with the
proposed requirement that the accumulated amounts include the financial
responsibility incurred toward both an individual deductible and/or
out-of-pocket limit and toward the other than self-only coverage
deductible and/or out-of-pocket limit. One commenter recommended that
plans be required to disclose to prospective enrollees whether an
enrollee's accumulated amounts are reduced through a plan's accumulator
adjustment program because, the commenter noted, having this
information prior to enrollment in a plan is crucial because of the
impact such programs have on participant, beneficiary, and enrollee
access, adherence, and outcomes.
The Departments agree that an essential part of providing accurate
cost-sharing estimates is disclosing individuals' progress toward their
accumulated amounts. However, the intent of the self-service tool is to
provide current participants, beneficiaries, and enrollees with
information about their plan or issuer, and, therefore, the Departments
are not finalizing any provisions related to disclosures to potential
enrollees. The final rules adopt this provision as proposed.
One commenter recommended the Departments confirm amounts made
available in account-based arrangements that can or must be used toward
cost-sharing expenses under a separate plan need not be reflected in
the accumulated amounts or cost-sharing estimate under the tool. The
commenter stated that there is an array of these types of arrangements
of varying types and structures and to incorporate them into the cost-
sharing estimate could be administratively challenging and would impose
a significant burden.
The Departments clarify that the estimates do not include amounts
made available through separate account-based arrangements. In
addition, the Departments encourage, but are not requiring, plans and
issuers to issue a disclaimer regarding such arrangements, as
necessary.
Certain commenters stated that the proposed requirement to display
accumulated amounts toward a cumulative treatment limitation on a
particular item or service would be difficult to implement and
requested elimination or delay of this requirement. Commenters
expressed that in some cases, this information may be tracked by third-
party vendors and not integrated into claims systems; for example,
plans and issuers often contract with third parties that provide
medical benefits management for certain services (physical therapy, for
example). Commenters stated that building the connectivity necessary to
exchange information on accumulated amounts in real time would take
significant time. Other commenters recommended this requirement be
optional.
The Departments acknowledge that disclosure of accumulated amounts
may present challenges for plans and issuers. However, an accurate
estimate of cost-sharing liability cannot be achieved without taking
into account a participant's, beneficiary's, or enrollee's accumulated
amounts, including cumulative treatment limitations. Nonetheless, to
give plans and issuers additional time to prepare, the disclosure
requirements related to cost-sharing liability estimates in the final
rules are not applicable until plan years (or in the individual market,
policy years) beginning on or after January 1, 2023, providing two
years for implementation, which should give plans and issuers
sufficient time to ensure that they are able to comply.
One commenter urged the Departments to include a requirement for
plans to provide the cost for the beneficiary to purchase a non-covered
prescription drug and to indicate whether and, if so, to what extent,
that cost will be applied against the deductible. The commenter stated
that knowing to what extent a non-covered drug expense will count
towards meeting a deductible and the annual limitation on cost sharing,
if at all, especially with regard to specialty drugs, is critical
because there are significant coverage gaps.
While the Departments appreciate the suggestions related to non-
covered prescription drugs, this rulemaking is focused on covered items
and services. The Departments are not inclined to increase the burden
imposed by the final rules by adding requirements to disclose
information regarding non-covered services, given that plans and
issuers may not have access to the costs of drugs they do not cover and
include in their formulary. The Departments will take this suggestion
into consideration for future rulemaking.
c. Third Content Element: In-Network Rates
Negotiated Rates
In the proposed rules, the Departments proposed to require group
health plans and health insurance issuers to disclose the negotiated
rate, reflected as a dollar amount, for an in-network provider or
providers for a requested covered item or service, to the extent
necessary to determine the participant's, beneficiary's, or enrollee's
cost-sharing liability. Many commenters did not support the disclosure
of negotiated rates, stating that publishing negotiated rates would not
meet the Departments' purported goal of helping consumers understand
costs and would possibly make purchasing more confusing and difficult
for consumers. Additionally, some commenters expressed concerns that
publication of negotiated rates would force plans and issuers to
violate non-disclosure contracts with providers. Conversely, many other
commenters did support the disclosure of negotiated rates and offered
support for their disclosure to participants, beneficiaries, and
enrollees. These commenters stated that consumers should be engaged and
educated about health care spending, and as discussed in more detail
below, several commenters supported the disclosure of negotiated rates
even when it is not relevant to a consumer's cost-sharing liability.
The Departments maintain that the disclosure of the negotiated
rates is a key element of overall price transparency. Participants,
beneficiaries,
[[Page 72195]]
and enrollees are often responsible for a percentage of the negotiated
rate through coinsurance or the entire negotiated rate if they have not
yet met their deductible. Consistent with discussions elsewhere in this
preamble, the Departments are of the view that such contracts typically
include exceptions where a particular disclosure is required by Federal
law.
In the preamble to the proposed rules, the Departments acknowledged
that some provider contracts express negotiated rates as a formula (for
example, 150 percent of the Medicare rate), but disclosure of formulas
is not likely to be helpful or understandable for many participants,
beneficiaries, and enrollees viewing this information. For this reason,
the final rules require plans and issuers to disclose the negotiated
rates and underlying fee schedules that result from using such a
formula, as a dollar amount.
A few commenters recommended disclosing negotiated rate ranges or
benchmarks to help consumers compare prices among providers. One
commenter stated it would be useful if plans disclosed their range of
in-network rates (or their average or median rate) for each service.
This commenter stated that, for certain services such as complex
surgeries, for which fees may be bundled and may vary widely depending
on the severity of a participant's, beneficiary's or enrollee's
condition, providing the range of in-network fees may be particularly
appropriate. This type of disclosure could alert participants,
beneficiaries, and enrollees to consider, and prompt them to consult
providers about, the full range of potential expenses for their care.
Another commenter recommended that, regardless of the participant's,
beneficiary's, or enrollee's out-of-pocket liability, the participant,
beneficiary, or enrollee should always be provided the full in-network
amount, as well as a comparison of that amount to a benchmark such as
the Fair Price or median in-network price. This commenter stated that
the in-network price for a service can vary by as much as 200 to 1,000
percent, depending on the provider selected. In order to achieve the
goals of transparency, consumers need to know the full price of a
service prior to care so they are able to effectively compare
providers' prices.
In the Departments' view, disclosure of formulas or ranges are not
likely to be helpful or understandable for many participants,
beneficiaries, and enrollees viewing this information. The purpose of
the internet-based self-service tool is to provide personalized costs
based on the participant's, beneficiary's, or enrollee's specific plan
or coverage, and ranges and formulas do not achieve this goal. For this
reason, the final rules retain the proposed requirement to disclose the
rate that results from using such a formula, which is required to be
expressed as a dollar amount.
Underlying Fee Schedule Rate
Given the unique nature of certain plan designs, in the proposed
rules, the Departments requested comment on whether there were certain
reimbursement or payment models that should be exempt from all or
certain aspects of the proposed rules. A few commenters urged the
Departments to clarify how capitation arrangements and value-based
reimbursement designs, including bundled payment arrangements and
reference-based pricing, would be regulated under the proposed rules.
Commenters stated that provider payment amounts are not knowable under
these types of arrangements until after care is provided and that they
cannot be attributed to a particular item or service provided to a
particular participant, beneficiary, or enrollee. Other commenters
stated that participants, beneficiaries, and enrollees should have
access to cost-sharing liability data for items and services that might
be rendered in the course of their care, but that the Departments'
proposed approach downplayed the complexity of payer-provider contracts
in a way that could inadvertently lead to participants, beneficiaries,
and enrollees receiving misleading estimates of their cost-sharing
liability. The commenter stated that only the consumer's cost sharing
and the fee-for-service component of reimbursement should be required
to be disclosed under these requirements. Another commenter stated that
the vast majority of bundled payment arrangements use a retrospective
settlement, in which the payer and provider determine a final
settlement after all care in the relevant episode has been delivered,
suggesting that a negotiated rate under these arrangements could not be
provided in advance.
The Departments are of the view that, for transparency in coverage
to be truly effective, consumers should have access to all pricing
information related to their care so they can make meaningful decisions
about their health care spending. Further, the Departments do not agree
that the disclosure of negotiated rates will be misleading to
participants, beneficiaries, or enrollees. Negotiated rates are already
an element of an EOB that participants, beneficiaries, and enrollees
are accustomed to receiving after receiving health care items or
services. As stated elsewhere in this preamble, providing this
information in advance equips a more cost-conscious participant,
beneficiary, and enrollee with the necessary information to make a more
informed decision about their health care. Furthermore, the Departments
are of the view that it is in the best interest of plans and issuers to
indicate, when disclosing these rates, what each rate is and how it is
applicable to the participant's, beneficiary's, or enrollee's plan or
coverage.
To more fully understand the complexity of payer-provider contracts
and, in an effort to clarify how the proposed rules would apply to
capitated, bundled, and other alternative reimbursement designs, the
Departments considered these public comments and conducted additional
research to understand different contracting models and the inputs that
would be necessary for determining a participant's, beneficiary's, or
enrollee's cost-sharing liability under these models.
Under some capitation arrangements, payers reimburse a provider a
set amount per participant, beneficiary, or enrollee for a pre-defined
amount of time, regardless of whether the participant, beneficiary, or
enrollee uses the provider's services. Capitation payments are
generally guided by actuarial principles and may be determined by
different factors, such as a participant's, beneficiary's, or
enrollee's age and gender. For instance, under some capitated models,
plans and issuers pay a provider or a collective panel of providers a
per-member-per-month (PMPM) capitation amount, which is the negotiated
rate. It is the Departments' understanding that under certain capitated
and bundled payment arrangements, providers' payments may be reconciled
retrospectively to account for utilization, value adjustments, or other
weighting factors that can affect the final payment to a provider. The
Departments understand that capitation arrangements also may include at
least one underlying fee schedule rate upon which a participant's,
beneficiary's, or enrollee's cost-sharing liability is determined.
As the Departments acknowledged earlier in this preamble,
negotiated rates, as defined in the final rules, do not always affect a
participant's, beneficiary's, or enrollee's cost-sharing liability. To
account for alternative reimbursement arrangements such as capitated
and bundled payment arrangements, the Departments are renaming the
third content element as ``in-network rates,'' comprised of the
[[Page 72196]]
following elements, as applicable to the plan's or issuer's payment
model: negotiated rate and underlying fee schedule rate, reflected as
dollar amounts. Plans and issuers must disclose the underlying fee
schedule rate used to determine participant, beneficiary, or enrollee
cost-sharing liability only where that rate is different from the
negotiated rate. As discussed earlier in this preamble, the final rules
require that the cost-sharing liability estimate for a requested
covered item or service be calculated using the current underlying fee
schedule rate if the plan or issuer uses such a fee schedule. The
Departments are of the view that disclosing underlying fee schedule
rates will provide the most relevant data on which cost sharing is
based, if cost sharing is not based on the negotiated rate, as
originally proposed.
Disclosing the Negotiated Rate and Underlying Fee Schedule Rate
In the proposed rules, the Departments acknowledged that if the
negotiated rate does not impact an individual's cost-sharing liability
under a plan or coverage for a covered item or service (for example, if
the copayment for the item or service is a flat dollar amount or zero
dollars and the individual has met a deductible, or a deductible does
not apply to that particular item or service), disclosure of the
negotiated rate may be unnecessary to calculate cost-sharing liability
for that item or service. Therefore, the Departments proposed that
disclosure of a negotiated rate would not be required if it is not
relevant for calculating an individual's cost-sharing liability for a
particular item or service. The Departments sought comment on whether
there are any reasons disclosure of negotiated rates should nonetheless
be required under these circumstances.
Many commenters agreed that negotiated rates should only be
disclosed to the extent they are used for determining cost-sharing
liability. Commenters further expressed that only information
meaningful to consumers' cost-sharing liability should be required to
be disclosed. One commenter stated that this interpretation should be
extended to payments tied to value, such as ``shared savings,''
bonuses, and other performance-based reimbursements.
Conversely, as stated earlier, many commenters supported the
disclosure of negotiated rates in all circumstances. One commenter
stated that disclosing the amount of the negotiated rate is extremely
valuable regardless of whether the disclosure of this information
impacts a participant's cost-sharing liability, because it will
illuminate the costs of these particular items and services--reflecting
the benefit consumers receive from their enrollment in the plan or
coverage, as well as helping them to be conscious of the costs incurred
by the plan overall. This commenter pointed out that if the plan or
issuer has different negotiated in-network rates with different
providers furnishing the same item or service, participants,
beneficiaries, and enrollees will have the opportunity to compare the
different rates among the different providers.
Another commenter suggested a number of benefits that could come
from the disclosure of negotiated rates through the cost-sharing tool,
even in cases in which that information is not relevant to the specific
cost-sharing inquiry. The commenter pointed out that even if the
participant's, beneficiary's, or enrollee's cost is not affected, the
plan's or issuer's cost could be significantly affected and that
allowing participants, beneficiaries, and enrollees awareness and
visibility of negotiated rates could provide consumers with a greater
understanding of health care costs and enable participants,
beneficiaries, and enrollees to seek out lower cost providers. The
commenter further stated that although participants, beneficiaries, and
enrollees will use the tool to look up estimated cost-sharing for
specific items and services, often they will also expect to seek
services from the same provider repeatedly (for example, for ongoing
treatment and follow-up care).
The Departments agree with those commenters who favored requiring
disclosure of negotiated rates even when the negotiated rate is not
relevant to determining cost sharing, because it may promote awareness
and understanding of health care prices and promotes transparency in
coverage. Accordingly, the phrase ``to the extent relevant to the
participant's or beneficiary's cost-sharing liability'' that appeared
in paragraph (b)(1) of the proposed regulations has been removed from
the final rules. The final rules modify the third content element to
require that the negotiated rate always be disclosed with cost-sharing
liability estimates, even if it is not used to determine cost sharing,
and that the underlying fee schedule rate also be disclosed, to the
extent that it is different from the negotiated rate, as applicable to
the plan's payment model.
With regard to plans and issuers using an alternative reimbursement
model, such as a capitated or bundled payment arrangement that does not
have negotiated rates or an underlying fee schedule, one commenter
stated that issuers do not always have access to the negotiated rates
or internal payment methodologies utilized by capitated medical groups
or other providers and would not be able to reliably provide cost
transparency based on a negotiated rate at the service level. In
contrast, another commenter stated there is no justification for
excluding plans that reimburse their providers based on capitation from
the internet-based self-service tool requirements as this would result
in an incomplete data set, and these plans already assign values to
services to administer benefits with deductibles and coinsurance, as
well as for risk adjustment and internal reporting purposes. Another
commenter stated that the Departments should include Accountable Care
Organizations (ACOs) and other capitated arrangements within the ambit
of the final rules and should require transparency and full disclosure
of financial incentive arrangements that underlie capitated
arrangements under a specific plan or contract, not just a consumer's
anticipated liability. This commenter stated that any exemptions may
actually be incentives for plans and issuers to move toward opaque
pricing models.
The Departments acknowledge that it is possible that some plans and
issuers using alternative reimbursement models may not have negotiated
rates or underlying fee schedule rates to disclose in the internet-
based self-service tool. However, the numbers of plans and issuers
without negotiated rates or underlying fee schedule rates is limited
and the Departments are of the view that an exemption for such
arrangements is not necessary. Additionally, the Departments are of the
view that providing an exemption for such arrangements will result in
incomplete data sets. As stated in the final rules, the in-network rate
must be disclosed, as applicable to the plan's or issuer's payment
model. If the plan or issuer does not have negotiated rates or
underlying fee schedule rates, the third content element does not
apply.
Prescription Drugs
The final rules adopt the requirement that group health plans and
health insurance issuers disclose to participants, beneficiaries, or
enrollees an estimate of cost-sharing liability for each item or
service, including prescription drugs. As discussed in the preamble to
the proposed rules, this would allow participants, beneficiaries, and
enrollees to request cost-sharing information for a specific billing
code
[[Page 72197]]
(as described later in this preamble) associated with a prescription
drug or by descriptive terms (such as the name of the prescription
drug), which would permit participants, beneficiaries, and enrollees to
learn the estimated cost of a prescription drug obtained directly
through a provider, such as a pharmacy or mail order service. In
addition to allowing participants, beneficiaries, and enrollees to
obtain cost-sharing information by using a billing code or descriptive
term, the proposed rules would also have permitted participants,
beneficiaries, and enrollees to learn the cost of a set of items or
services that include a prescription drug or drugs that is subject to a
bundled payment arrangement for a treatment or procedure. In the
proposed rules, the Departments acknowledged that outside of a bundled
payment arrangement, plans and issuers often base cost-sharing
liability for prescription drugs on the undiscounted list price, such
as the AWP or WAC, which frequently differs from the price the plan or
issuer has negotiated for the prescription drug.\114\ In these
instances, providing the participant, beneficiary, or enrollee with a
rate that has been negotiated between the issuer or plan and its PBM
could be misleading, as this rate would reflect rebates and other
discounts, and could be lower than what the individual would pay--
particularly if the participant, beneficiary, or enrollee has not met
his or her deductible.
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\114\ ``Follow the Dollar.'' PhRMA. November 30, 2017. Available
at: https://www.phrma.org/report/follow-the-dollar-report.
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The Departments sought comment as to whether a rate other than the
negotiated rate, such as the undiscounted price, should be required to
be disclosed for prescription drugs, and whether and how to account for
any and all rebates, discounts, and dispensing fees to ensure
participants, beneficiaries, and enrollees have access to meaningful
cost-sharing liability estimates for prescription drugs.
Several commenters supported disclosure of rebates, discounts, and
other price concessions for drugs. One commenter referred to drug price
concessions as one of the ``most confounding black boxes of health
care'' and stated that data suggests these concessions are actually
increasing out-of-pocket costs for participants, beneficiaries, and
enrollees. This commenter urged the Departments to require plans and
issuers to disclose the list price, the negotiated rate, a single
dollar value reflecting the total amount of price concessions, and the
price used to calculate the participant's, beneficiary's, and
enrollee's coinsurance along with, if different from the negotiated
rate, an explanation as to why the price is different from the
negotiated rate. Another commenter opined that participants,
beneficiaries, and enrollees have the right to know a drug's
undiscounted price, discounted or negotiated price, and the total sum
of all price concessions for that drug, including fees, rebates, and
discounts. This commenter stated that providing a beneficiary with
these three data points strikes the appropriate balance between
improving transparency without misleading or overwhelming the
participant, beneficiary, or enrollee.
Many commenters suggested that plans and issuers be required to
disclose when the participant's, beneficiary's, or enrollee's cost-
sharing requirement exceeds the price paid by the plan or issuer. One
commenter stated that in cases where plans pass through some or all
rebates and other price concessions to participants, beneficiaries, and
enrollees, the prices disclosed to participants, beneficiaries, and
enrollees should be the price net of those rebates and concessions. The
commenter emphasized the importance of plans and issuers also
disclosing to participants, beneficiaries, and enrollees when
manufacturer rebates and discounts are not passed through to them at
the point-of-sale or factored into cost-sharing. One commenter noted
that negotiated prices for prescriptions or cash price alternatives may
sometimes appear less expensive, but that such alternative rates (for
example, cash price options) may increase overall costs if such rates
offset the ability to reach a plan's deductible or out-of-pocket
maximum thresholds. Therefore, this commenter requested that the
Departments provide clarity as to whether plans and issuers would be
responsible for notifying participants, beneficiaries, and enrollees of
such considerations and/or making such calculations. Similarly, two
commenters urged the Departments to require disclosure of the
negotiated rate for drugs in all situations, even where the beneficiary
owes a fixed-amount copayment, and cited reports of cases when, for
inexpensive generics, the beneficiary's fixed-amount copay actually
exceeded the negotiated rate.
Three commenters recommended that the Departments provide plans the
flexibility to display the most meaningful price to an enrollee for
drugs. One commenter stated that if the participant, beneficiary, or
enrollee's cost sharing is based upon a specified benchmark, the plan
should be allowed to specify the benchmark used in the tool's
documentation. This commenter suggested that requiring plans to conform
to a single standard is not possible, and in effect may be unhelpful to
consumers, given the multitude of contracts (and different contract
terms) that each plan's PBM may have with pharmacies. Another commenter
stated providing this flexibility will allow for issuer innovation in
developing cost-estimator functionality that provides real-time,
accurate, and useful prescription drug estimates to participants,
beneficiaries, or enrollees.
One commenter recommended the Departments consider using ``net
price'' rather than the ``negotiated rate'' for estimating cost-sharing
liability for prescription drugs. The commenter explained that direct
and indirect remuneration (DIR) fees under Medicare Part D and similar
PBM practices in the private market were originally designed to capture
rebates and other mechanisms not included at the point-of-sale.
However, the commenter stated that DIR fees and other retroactive fees
utilized by PBMs are now being used beyond their original purpose to
retroactively adjust pharmacies' payment months after the sale,
sometimes below the price paid by the pharmacy.
Some commenters stated that the Departments should not require
display of negotiated drug prices, rebates, or other discounts or fees.
Two commenters expressed that, rather than increasing transparency or
providing actionable or meaningful information to participants,
beneficiaries, or enrollees, estimated rebate information would simply
confound and frustrate participants, beneficiaries, or enrollees, given
its lack of direct relevance to the amount the participant,
beneficiary, or enrollee is required to pay for the drug at a pharmacy.
Another commenter stated that disclosing highly confidential dispensing
fees would benefit only those parties being paid dispensing fees, by
giving them a window into the dispensing fees paid to their
competitors, and advised that the Departments should avoid requiring
any disclosure of drug prices, rebates, discounts, or fees that would
undermine plans' and issuers' ability to negotiate lower drug costs.
The Departments also solicited comment as to whether there are
scenarios in which including drug pricing information in cost estimates
would be problematic. One commenter recommended that the final rules
require disclosure of an estimate of the cost-sharing liability
associated with a drug only when there is an out-of-pocket cost to the
participant, beneficiary, or enrollee that is directly
[[Page 72198]]
attributable to the drug. Another recommended that when the price of a
drug is not the basis of the enrollee's cost-sharing liability, plans
should be given the option to publish the benchmark price or omit a
price altogether, displaying only the enrollee's cost-sharing
liability.
The Departments also sought comment on whether the relationships
between plans or issuers and PBMs allow plans and issuers to disclose
rate information for drugs, or if contracts between plans and issuers
and PBMs would need to be amended to allow plans and issuers to provide
a sufficient level of transparency. If those contracts would need to be
amended, the Departments sought comment on the time that would be
needed to make those changes. While some commenters stated that the
rates negotiated between PBMs and pharmacies are considered
confidential, other commenters stated that existing contracts would not
prevent PBMs or issuers from disclosing the required information. One
commenter stated that it is common that contracts be modified in
response to changes in a statute or regulation, and that Federal public
policy imperatives override existing contractual provisions. This
commenter stated the public interest in complete disclosure to reduce
costs for consumers unquestionably outweighs any confidentiality
provisions in current contracts that might otherwise protect disclosure
of relevant information to the Federal Government.
The Departments agree that participants, beneficiaries, and
enrollees, as well as health care payers such as employers, should have
access to meaningful pricing information related to drug pricing in
order to meaningfully evaluate plan and issuer offerings and gain
transparency into potential out-of-pocket costs.
The Departments also acknowledge that contract terms may need to be
amended based on the final rules. The Departments agree that disclosure
of rebates, discounts, and other price concessions would further the
goals of price transparency, but also acknowledge other commenters'
concerns that disclosing all these elements might cause consumer
confusion. The Departments also acknowledge that there could be value
in using ``net price'' rather than ``negotiated rate'' and in
disclosing when a participant's, beneficiary's, or enrollee's cost-
sharing liability exceeds the price paid by the plan or issuer. As
described by commenters, there are numerous pricing inputs throughout
the drug supply chain that affect the final price for the consumer--
making complete transparency on drug pricing more complex than that of
other items and services. The Departments aim to strike a balance
between illuminating some of the factors that drive drug costs and not
overwhelming consumers with information that is not directly relevant
to their cost-sharing liability. To that end, the final rules require
plans and issuers to disclose in element (i), an individual's out-of-
pocket cost liability for prescription drugs, and in element (iii), the
negotiated rate of the drug. As discussed elsewhere in this preamble,
the Departments recognize that the negotiated rate might be different
for branded and generic drugs. For instance, the negotiated rate might
be the WAC for branded drugs and the Maximum Allowed Cost (MAC) for
generic drugs. The Departments also acknowledge that this price might
be established differently for different plans and issuers. The
Departments anticipate this disclosure generally will not necessitate
the disclosure of information on discounts, rebates, or price
concessions for a drug.
The Departments recognize there may be circumstances in which a
drug carries no cost-sharing liability for a participant, beneficiary,
or enrollee. If there is no cost sharing associated with a prescription
drug, under the final rules, the tool should reflect a cost-sharing
value of $0 for clarity, but the negotiated rate must be displayed.
The proposed rules sought comment on the possibility of requiring
access to the APIs used by pharmacies in accessing drug prices. One
commenter stated that drug prices frequently differ from period to
period over the course of the year, as well as across pharmacy
locations even within the same national pharmacy chain. The commenter
recommended that the Departments consider requiring PBMs to provide
payers, group plans, and third parties with access to the same price
APIs accessed by pharmacies, stating that, with access to an open API,
the plan or third party could request the estimated price for the same
prescription at multiple retail pharmacies and receive real-time retail
pricing based upon the participant's, beneficiary's, or enrollee's
plan. The Departments recognize the value in requiring cost-sharing
information be made available through an API and will use the comments
received to inform future rulemaking.
Commenters requested that the Departments confirm that issuers may
provide a link to prescription drug cost tools offered through PBMs or
vendors to satisfy the requirement to provide pricing information for
prescription drugs. One commenter also urged the Departments to
prohibit the internet-based, self-service tool from being used by
prescribers' e-prescribing and electronic medical record systems or by
plans to steer patients to pharmacies other than a patient's pharmacy
of choice, such as those owned wholly or partially by health plans or
PBMs.
The Departments agree that plans and issuers who provide
participants', beneficiaries', or enrollees' cost-sharing liability
estimates and negotiated rates through a standalone tool provided by a
PBM or third-party vendor satisfy the requirements under the final
rules. The Departments also clarify that if the PBM or other third-
party vendor fails to provide full or timely information, then the plan
or issuer, not the PBM or third-party vendor, violates these
transparency disclosure requirements. Regarding a prohibition on
steering patients to certain pharmacies by plans or prescribers, the
Departments are not finalizing any prohibitions at this time and will
monitor the implementation of these disclosure requirements.
d. Fourth Content Element: Out-of-Network Allowed Amount
The fourth content element is the out-of-network allowed amount for
the requested covered item or service. In the proposed rules, the
Departments proposed to define ``out-of-network allowed amount'' to
mean the maximum amount a group health plan or health insurance issuer
would pay for a covered item or service furnished by an out-of-network
provider. Under the proposed rules, plans and issuers would be required
to disclose an estimate of cost-sharing liability for a participant,
beneficiary, or enrollee. Therefore, the Departments proposed that,
when disclosing an estimate of cost-sharing liability for a covered
item or service from an out-of-network provider, a plan or issuer would
disclose the out-of-network allowed amount and any cost-sharing
liability the participant, beneficiary, or enrollee would be
responsible for paying. For example, if a plan has established an out-
of-network allowed amount of $100 for an item or service from a
particular out-of-network provider and the participant, beneficiary, or
enrollee is responsible for paying 30 percent of the out-of-network
allowed amount ($30), the plan would disclose both the allowed amount
($100) and the individual's cost-sharing liability ($30), indicating
that the individual is responsible for 30 percent of the out-of-network
allowed amount. Under the proposed rules, this element would only be
relevant when a participant, beneficiary, or enrollee
[[Page 72199]]
requests cost-sharing information for a covered item or service
furnished by an out-of-network provider.
In the proposed rules, the Departments explained that the
definition of cost-sharing liability does not include amounts charged
by out-of-network providers that exceed the out-of-network allowed
amount, which participants, beneficiaries, or enrollees must pay
(sometimes referred to as balance bills). Therefore, it may be
difficult for participants, beneficiaries, or enrollees to determine
their likely out-of-pocket costs for covered items and services
furnished by an out-of-network provider. The Departments also explained
that the statutory language of section 1311(e)(3)(A)(vii) of PPACA and
section 2715A of the PHS Act indicates that Congress intended that
participants, beneficiaries, enrollees, and other members of the public
have access to accurate and timely information regarding cost sharing
and payments with respect to any out-of-network coverage. In the
Departments' view, requiring plans and issuers to disclose out-of-
network allowed amounts and a participant's, beneficiary's, or
enrollee's cost-sharing obligation for covered items and services is
necessary and appropriate to fulfill this statutory mandate, and would
give individuals information necessary to estimate their out-of-pocket
costs, assuming they request additional information from an out-of-
network provider about how much the provider would charge for a
particular item or service.
One commenter encouraged the Departments to eliminate the proposed
``maximum amount'' standard and to instead incorporate usual,
customary, and reasonable (UCR) amounts as the required plan disclosure
for out-of-network cost estimates under any final rulemaking. The
commenter stated that the ``maximum amount'' a plan may be willing to
pay a given provider for a service is not necessarily predetermined.
This commenter stated that while some out-of-network providers and
plans may participate in super-regional or national ``discount''
arrangements through third parties, in many cases payments to out-of-
network providers are individually negotiated. Further, while a plan
might generally start with payment that is consistent with UCR
calculations (with every intention of paying no more than this amount),
other circumstances may result in negotiated increases to that
reimbursement. As such, prospectively reporting an accurate ``maximum
amount'' is impossible in some cases. Additionally, this commenter
stated that because many out-of-network reimbursements, and in
particular high-cost claims, are individually negotiated, initial
disclosure of a plan's true maximum reimbursement, insofar as this can
be calculated or even estimated in advance, would materially reduce a
plan's bargaining power by notifying non-contracted providers in
advance of the amount they are likely to secure from a plan if they
assert all available leverage in a negotiation. To the extent
participant, beneficiary, or enrollee cost-sharing liability is
ultimately derived from out-of-network payment amounts, this
requirement is likely to increase out-of-pocket costs for consumers
when seeking care from out-of-network providers.
Conversely, one commenter stated that while larger, for-profit,
national health plans can afford to utilize the UCR, smaller, regional
health plans are at a market disadvantage if they are compelled to base
allowed amounts on the UCR, rather than negotiating on a case-by-case
basis in a constrained market. As a result, some health plans will
struggle to determine and provide information about maximum out-of-
network allowed amounts--a range of possible ``allowed amounts'' may be
the most information some health plans have available.
The Departments agree with commenters that the UCR may be a more
accurate estimate of the amount a plan or issuer will pay an out-of-
network provider for covered items or services, if the plan relies on
UCR to determine out-of-network rates. However, the Departments
acknowledge that basing allowed amounts on the UCR may disadvantage
smaller plans. The Departments also acknowledge that a plan or issuer
may be able to provide a participant, enrollee, or beneficiary with a
more accurate estimate of an out-of-network allowed amount by using
calculations based on historical claims data, because the plan or
issuer does not have a pre-determined negotiated rate with out-of-
network providers. The Departments acknowledge the concern that plans
may lose bargaining power by disclosing out-of-network allowed amount
to consumers; however, the Departments are of the view that the out-of-
network allowed amount is a critical element of price transparency and
its disclosure is essential to enabling consumers to estimate their
out-of-network costs in advance. To this end, the Departments are
modifying this provision to require plans and issuers to disclose the
out-of-network allowed amount or any other calculation that provides a
more accurate estimate of the amount a plan will pay for the requested
covered item or service, such as a UCR. Allowing plans and issuers to
provide an amount other than the out-of-network allowed amount could
better serve consumers with a more accurate estimate of what a plan or
issuer may reimburse an out-of-network provider. The Departments
clarify that if a plan or issuer chooses to use another metric that
provides a reasonably accurate estimate of what a plan or issuer will
pay for a covered item or service from an out-of-network provider, the
plan or issuer must still provide a participant, beneficiary, or
enrollee with information regarding any cost sharing the participant,
beneficiary, or enrollee would be responsible for paying.
Some commenters recommended the Departments not require plans and
issuers to provide allowed amount and cost-sharing information for
covered services furnished by an out-of-network provider. One commenter
stated it is not possible for issuers to include allowed amounts for
out-of-network providers because, without a provider contract, issuers
do not have the necessary information, including provider names,
National Provider Identifier (NPI), address, specialty, or other
demographic information to include these providers in a price
transparency tool. One commenter stated that providing real-time
disclosures of allowed amounts could be challenging to the extent that
plans and issuers determine the allowed amount for certain out-of-
network items and services based on a percentage of billed charges, as
billed charges are unknown by the plan or issuer prior to a claim for
health care services.
The Departments acknowledge the challenges plans and issuers may
face disclosing this element, but the Departments are of the view that
information regarding out-of-network coverage is essential to the goal
of price transparency. With regard to plans and issuers lacking the
necessary information for providers with whom they do not contract, the
Departments are of the view that plans and issuers should know what
they are willing to pay for certain items and services, irrespective of
provider. The final rules provide flexibility for plans and issuers to
provide an estimate of what the plan will pay by allowing plans and
issuers to disclose either the out-of-network allowed amount or another
amount that would provide a reasonably accurate estimate of what a plan
would reimburse an out-of-network provider for a covered item or
service. Given that some plans and issuers determine the allowed amount
for certain out-of-network items and services based on a percentage of
billed charges, the final rules provide that a percentage can be
[[Page 72200]]
disclosed instead of a dollar amount, if plans and issuers reimburse
out-of-network providers a percentage of the billed charges for a
covered item or service.
One commenter sought clarification that the tool is meant to
provide cost-sharing information for out-of-network providers and not
just the allowed amounts.
As discussed earlier in this preamble under the first content
element, under the final rules, the plan or issuer is required to
disclose both the out-of-network allowed amount, as described earlier
in this preamble, and any cost-sharing liability, based on that allowed
amount, that the participant, beneficiary, or enrollee would be
responsible for paying.
One commenter stated that the Departments should not require Health
Maintenance Organizations' (HMOs') out-of-pocket calculators to provide
out-of-network data. The commenter noted that the proposed rules
limited the tool to covered services, and HMOs generally do not cover
benefits provided by out-of-network and, therefore, should not be
required to estimate out-of-network costs.
The Departments understand that some plans and issuers may not
provide any reimbursement to an out-of-network provider for an
otherwise covered item or service. Nonetheless, it is the Departments'
understanding that some HMOs reimburse an out-of-network provider for
covered items and services in certain circumstances and, therefore, the
Departments expect HMOs to provide cost-sharing information with regard
to out-of-network coverage. The Departments recognize that in many
cases, an HMO's maximum allowed amount for an out-of-network service
will be $0. However, the Departments are of the view that it is
important for a participant, enrollee, or beneficiary to understand
what the plan or issuer will or will not pay for out-of-network costs.
Therefore, if the plan or issuer, including an HMO, does not provide
any reimbursement for an item or service provided by an out of network
provider, the Departments expect the plan or issuer to disclose $0 as
the allowed amount.
e. Fifth Content Element: Items and Services Content List
The fifth content element is a list of those covered items and
services for which cost-sharing information is being disclosed for
items or services subject to a bundled payment arrangement. The
Departments proposed that this requirement would apply only when a
participant, beneficiary, or enrollee requests cost-sharing information
for an item or service that is subject to a bundled payment arrangement
that includes multiple items or services. The Departments proposed
that, in cases in which an individual requests a cost-sharing liability
estimate for a covered item or service that is subject to a bundled
payment arrangement, plans and issuers would be required to disclose a
list of each covered item and service included in the bundled payment
arrangement and the individual's cost-sharing liability for those
covered items and services as a bundle, but not a cost-sharing
liability estimate separately associated with each covered item or
service included in the bundle.
While some commenters supported the inclusion of cost-sharing
information for bundled payment arrangements, others did not support
requiring the disclosure of bundled payment arrangements and the items
and services included in the arrangement. These commenters stated
disclosure of this information would likely be unhelpful to the
participant, beneficiary, or enrollee and might cause confusion. One
commenter encouraged the Departments to clarify that disclosure for
diagnostic imaging procedures in particular should be presented to
consumers in a method that is inclusive of the combined professional
and technical rates, or the globally billed rate.
The Departments are of the view that understanding which items and
services are included in a bundled payment arrangement will provide
helpful information for participants, beneficiaries, and enrollees, so
that they understand what items and services are accounted for in
calculating their cost-sharing liability. The Departments are of the
view that this list is unlikely to cause confusion. Instead, it will
reduce confusion by clearly identifying what individual items and
services would be covered under their estimated cost-sharing liability.
If the plan or issuer reimburses a procedure, such as imaging, at a
global rate that includes both professional and technical charges, then
that global rate is a rate for a bundled payment arrangement for which
the applicable content elements must be disclosed, just as for all
other items and services. The final rules adopt the provision that
plans and issuers provide a list of items or services for items and
services subject to bundled payment arrangements for which a cost-
sharing liability estimate is being disclosed, with non-substantive
edits for improved readability.
f. Sixth Content Element: Notice of Prerequisites to Coverage
The sixth content element is a notification, whenever applicable,
informing the individual that a specific covered item or service for
which the individual requests cost-sharing information may be subject
to a prerequisite for coverage. The proposed rules defined the term
prerequisite to mean certain requirements relating to medical
management techniques for covered items and services that must be
satisfied before a plan or issuer will cover the item or service.
Specifically, the proposed rules provided that prerequisites include
such techniques as concurrent review, prior authorization, and step-
therapy or fail-first protocols. In the proposed rules, the Departments
intended for the definition of prerequisite to capture medical
management techniques that apply to an item or service that require
action by the participant, beneficiary, or enrollee before the group
health plan or health insurance issuer will cover the item or service.
Accordingly, the proposed definition of prerequisite did not include
medical necessity determinations generally, or other forms of medical
management techniques that do not require action by the participant,
beneficiary, or enrollee. While the prerequisites enumerated in the
proposed rules were provided as an illustrative list, the Departments
solicited comment on whether there are any additional medical
management techniques that should be explicitly included as
prerequisites in the final rules.
Several commenters supported the inclusion of this element. One
commenter stated that helping patients understand any coverage
prerequisites prior to care, such as prior authorization, may help to
eliminate some of the confusion and unnecessary administrative burden
following care. Another stated that requiring a plan to disclose
prerequisites in an easily understandable format may help patients
complete required protocols and thus would improve adherence.
A few commenters recommended additional disclosures or offered
suggestions to strengthen these requirements. One commenter encouraged
the Departments to include clinical coverage policies for services that
are more specific than general medical necessity criteria. For example,
some plans and issuers utilize coverage policies that require specific
diagnoses or documented symptoms before an item or service may be
covered. The commenter explained that while these
[[Page 72201]]
policies may not technically require an action by the beneficiary, they
are important in determining whether the specific item or service is
covered. Another commenter recommended that plans and issuers clearly
disclose every utilization control that stands between the participant,
beneficiary, or enrollee and a prescription, suggesting that this type
of disclosure would help patients meet utilization control standards.
Another commenter urged the Departments to strengthen this requirement
by requiring plans and issuers to provide a description of the actual
required prerequisites. The commenter stated that the proposed
regulation requires only notification of the existence of a
prerequisite, but not any detail about what the prerequisite is and how
it can be satisfied. Two commenters encouraged the Departments to
standardize this type of notification language to ensure that all
consumers receive a consistent message regarding the provision of
health care services.
One commenter requested that the Departments provide that the
prerequisites listed in proposed rules (that is, concurrent review,
prior authorization, step-therapy, and fail-first protocols) are an
exclusive list. Another commenter stated that prerequisite notification
should be limited to simple notifications that prerequisites apply to a
service, and communication of specific prerequisites should not be
required until a Fast Healthcare Interoperability Resources (FHIR)
standard for transmission of this information is established and
operationalized.
As discussed in the proposed rules, the Departments intended for
the definition of prerequisite to capture medical management techniques
that apply to an item or service that require action by the
participant, beneficiary, or enrollee before the plan or issuer will
cover the item or service. The Departments consider plan or policy
provisions that require a diagnosis or documented symptoms before a
service or item would be covered to be medical necessity determination
requirements that do not require action on behalf of the participant,
beneficiary, or enrollee. Therefore, the Departments did not include
such terms in the proposed prerequisite requirement. The Departments
are finalizing regulation text to reflect that concurrent review, prior
authorization, and step-therapy or fail-first protocols are the
exhaustive list of prerequisites about which plans and issuers would
need to provide notice. Furthermore, while the Departments acknowledge
that providing a complete description of prerequisites might be helpful
to consumers, the Departments are not of the view that requiring plans
or issuers to provide such descriptions is necessary. The Departments
determined that requiring a complete description of the prerequisite
would create unnecessary complexity and impose significant burdens on
plans and issuers regarding information that is already available in
plan documents. Additionally, while the Departments recognize the
importance of FHIR in the push towards greater interoperability, it is
not necessary to delay finalizing these rules until the FHIR standards
are finalized as the final rules do not require any APIs to be built
nor exposed for public consumption. The final rules adopt this content
element requirement, with the modifications discussed in this section.
g. Seventh Content Element: Disclosure Notice
The seventh and final content element proposed is a notice that
communicates certain information in plain language, including several
specific disclosures. First, the Departments proposed that this notice
would include a statement that out-of-network providers may bill
participants, beneficiaries, or enrollees for the difference between
providers' billed charges and the sum of the amount collected from the
group health plan or health insurance issuer and the amount collected
from the participant, beneficiary, or enrollee in the form of cost-
sharing (the difference often referred to as balance billing) and that
these estimates do not account for those potential additional amounts.
In the proposed rules, the Departments acknowledged that there are
numerous state laws that address balance-billing practices such that
the notice described in the proposed content element regarding balance
bills may be misleading or inaccurate for beneficiaries, participants,
or enrollees enrolled in a plan or coverage in certain states. The
Departments requested comment on whether any modifications to this
content element would be appropriate to allow plans and issuers to
accurately advise participants, beneficiaries, or enrollees of their
potential exposure to or protection from any balance bills.
Second, the Departments proposed that the notice be required to
convey that actual charges for the participant's, beneficiary's, or
enrollee's covered items and services may be different from those
described in a cost-sharing liability estimate, depending on the actual
items and services received at the point of care.
Third, the Departments proposed that the notice be required to
include a statement that the estimated cost-sharing liability for a
covered item or service is not a guarantee that coverage will be
provided for those items and services.
Finally, the Departments proposed that plans and issuers be
permitted to include any additional information, including other
disclaimers that the plan or issuer determines appropriate, so long as
the additional information does not conflict with the information they
are required to provide. For example, plans and issuers would have been
permitted to include additional language so long as the language could
not reasonably be read to disclaim the plan's or issuer's
responsibility for providing a participant, beneficiary, or enrollee
with accurate cost-sharing information, or plans and issuers could
choose to provide a disclaimer that informs consumers who are seeking
estimates of cost-sharing liability for out-of-network allowed amounts
that they may have to obtain a price estimate from the out-of-network
provider in order to fully understand their out-of-pocket cost
liability. Plans and issuers would also have been permitted to provide
a disclaimer indicating how long the price estimate will be valid,
based on the last date of the contract term for the negotiated rate or
rates (if multiple providers with different contract terms are
involved). The Departments are of the view that this type of disclaimer
could provide participants, beneficiaries, and enrollees with a better
understanding of how their cost estimate may change over time. The
Departments sought comment on whether a specific disclaimer indicating
the expiration of the cost estimate should be required. Furthermore,
the Departments explained in the proposed rules that plans and issuers
may also include disclaimer information regarding prescription drug
cost estimates and whether rebates, discounts, and dispensing fees may
impact the actual cost to the participant, beneficiary, or enrollee.
The Departments developed model language that plans and issuers
could use, but would not be required to use, to satisfy the disclosure
notice requirements described above. This model language was proposed
contemporaneously with, but separate from, the proposed rules.\115\ The
[[Page 72202]]
Departments sought comment on the proposed model language and any
additional information that stakeholders believed should be included in
the model notice or any information that should be omitted from the
model notice.
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\115\ ``Transparency in Coverage. Model Notice.'' United States
Department of Labor. Available at: https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/transparency-in-coverage-draft-model-disclosure.pdf.
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The proposed rules clarified that this disclosure notice would be
in addition to the information that QHP issuers are currently required
to publish on their websites pursuant to 45 CFR 156.220(a)(7) regarding
cost-sharing and payments with respect to out-of-network coverage. In
addition, some portions of this disclosure may overlap with network
adequacy disclosure standards under 45 CFR 156.230(e). That section
requires QHP issuers to count the cost-sharing paid by an enrollee for
an out-of-network essential health benefit (EHB) provided by an out-of-
network ancillary provider in an in-network setting toward the
enrollee's out-of-pocket limit or provide a notice to the enrollee that
additional costs may be incurred for an EHB, including balance billing
charges, if applicable.
The Departments requested comment on the proposed notice
disclaimers and whether any additional disclaimers would be necessary
or beneficial to participants, beneficiaries, and enrollees in learning
about their potential cost-sharing liability for covered items and
services. For example, the Departments inquired whether the Departments
should require a notice that explains that the cost-sharing information
provided may not account for claims a participant, beneficiary, or
enrollee has submitted that the plan or issuer has not yet processed.
The Departments also considered whether to require plans and issuers to
provide a participant, beneficiary, or enrollee information regarding
non-covered items or services for which the individual requests cost-
sharing information. For example, there could be a requirement that a
plan or issuer provide a statement, as applicable, indicating that the
item or service for which the participants, beneficiaries, and
enrollees has requested cost-sharing information is not a covered
benefit under the terms of the plan or coverage, and expenses charged
for that item or service will not be reimbursed by the plan or
coverage.
Several commenters agreed with the proposed disclosure notice
requirements. Specifically, many commenters supported the disclosure
that estimates may not reflect the amount ultimately charged to the
participant, beneficiary, or enrollee. One commenter recommended the
disclosure include examples of circumstances under which a
participant's, beneficiary's, or enrollee's actual cost-sharing
liability may differ from the estimate provided by their plan or issuer
(for example, comorbidities or unanticipated complications). The
commenter stated that a more comprehensive explanation of how
participant, beneficiary, or enrollee characteristics might affect
charges for covered items and services would help them better
understand their potential exposure to higher cost-sharing amounts. One
commenter suggested that the notice include stronger wording to educate
the plan participant about the strong likelihood of a surprise amount
due that differs greatly from the estimate. One commenter recommended
that the notice include information that DIR Fees charged to pharmacies
inflate participants', beneficiaries', and enrollees' cost sharing and
that plans and issuers may claw back that inflated cost sharing from
the pharmacy.
One commenter recommended that plans and issuers be required to
disclose additional information to help participants, beneficiaries,
and enrollees understand the appropriate point of contact for questions
and complaints. This commenter recommended that the final rules require
issuers to provide participants, beneficiaries, and enrollees with
contact information for their state departments of insurance when
covered by insurance that is primarily state-regulated. For group
health plans that are not fully insured, the commenter recommended that
the plan provide contact information for the appropriate Federal
regulator.
One commenter requested flexibility with disclaimer language
regarding a notice provided in paper form to reflect that the estimate
may not be reflective of services received or claims processing, or to
direct the participant, beneficiary, or enrollee to call their plan or
issuer or use the internet for more up-to-date information. Similarly,
one commenter recommended that a timestamp be required for notices
provided in paper form to account for potential price changes. Several
commenters supported requiring plans and issuers to add to the notice a
date on which the estimate will expire, while other commenters did not.
One commenter expressed concern regarding the statement in the
preamble to the proposed rules that the required disclosure notice
regarding balance-billing information ``may be misleading or inaccurate
for beneficiaries, participants, or enrollees enrolled in a plan or
coverage in certain states,'' given the multi-state nature of most
employer-sponsored plans. Another commenter stated that state
regulators should be able to direct issuers to include information in
the disclosure that accurately describes the state's balance billing
laws, and that any notice provided to consumers in advance of receiving
services should have information as to whether the participant,
beneficiary, or enrollee is likely to be protected from liability under
state or Federal balance billing laws. The commenter further stated
that some states already have state laws related to disclosure of costs
to consumers and the final rules should be clear that this requirement
does not preempt these state requirements. Two commenters urged the
Departments to make clear that participants, beneficiaries, and
enrollees are not protected from out-of-network provider and facility
balance billing, except where balance billing would be barred by state
law.
The final rules are not intended to preempt state laws regarding
balance billing. In the final rules, the Departments have modified this
requirement to clarify that the balance billing statement is only
required if balance billing is permitted under state law. Plans and
issuers have flexibility to use the model notice language or create
their own notices with greater specificity regarding their state's
laws.
One commenter expressed concern that allowing plans to include a
statement that the estimated cost-sharing liability is not a guarantee
of coverage negates the intent of the proposed rules, given that
consumers who receive a notice from their health plan regarding
estimated out-of-pocket costs would naturally assume coverage of those
services.
The Departments acknowledge this concern; however, there are many
reasons estimated cost-sharing information may not be accurate when
items and services are ultimately furnished. For example, it is
possible for coverage to end (for example, due to non-payment of
premiums) between the time an estimate is provided and an item or
service is furnished. Additionally, an estimate may show the cost for
an item or service as a treatment for a certain condition, but the item
or service may not be covered for the condition that is ultimately
diagnosed at the point of care. Therefore, the final rules adopt the
provision as proposed.
Several commenters recommended that the Departments issue
guidelines as to what is considered ``plain language.'' The commenters
recommended that the Departments provide examples of
[[Page 72203]]
typical disclosure language compared to its ``plain language''
equivalent. They further recommended that these examples be tested
through various focus groups to ensure consumer comprehension.
The final rules define ``plain language'' to mean language written
and presented in a manner calculated to be understood by the average
participant, beneficiary, or enrollee.\116\ Determining whether this
standard has been satisfied requires taking into account such factors
as the level of comprehension and education of typical participants,
beneficiaries, or enrollees in the plan or coverage and the complexity
of the terms of the plan. Accounting for these factors would require
limiting the use of technical jargon and long, complex sentences, so
that the information provided will not have the effect of misleading,
misinforming, or failing to inform participants, beneficiaries, or
enrollees. The Departments are of the view that the final rules and
this preamble provide sufficient detail regarding the meaning of plain
language.
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\116\ 29 CFR 2520.102-2(a).
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Some commenters recommended that plans and issuers should disclose
whether they count copayment assistance and other third-party payments
in the calculation of the beneficiary's deductible and out-of-pocket
maximum. The commenter noted that as more plans implement copay
accumulators that do not count these payments, issuers should be
required to disclose these policies to their beneficiaries.
The Departments are of the view that knowing whether these payments
apply to accumulators is germane to price transparency and should be
required in the final rules. To that end, the final rules adopt a fifth
notice content requirement (codified at 26 CFR 54.9815-
2715A2(b)(1)(vii)(D), 29 CFR 2590.715-2715A2(b)(1)(vii)(D), and 45 CFR
147.211(b)(1)(vii)(D)) that plans and issuers must provide a statement
disclosing whether copayment assistance and other third-party payments
are included in the calculation of the participant's, beneficiary's, or
enrollee's deductible and out-of-pocket maximum.
As discussed under the first content element, some items or
services may not be subject to cost sharing if they are furnished as
preventive items or services, while the same item or service could be
subject to cost sharing if it is furnished for non-preventive purposes
or provided by an out-of-network provider. Therefore, the final rules
adopt an additional notice requirement (codified at 26 CFR 54.9815-
2715A2(b)(1)(vii)(E), 29 CFR 2590.715-2715A2(b)(1)(vii)(E), and 45 CFR
147.211(b)(1)(vii)(E)) stating that, for an item or service that is a
recommended preventive service under section 2713 of the PHS Act where
the plan or issuer cannot determine whether the request is for a
preventive or non-preventive item or service, the plan or issuer must
provide a statement that the item or service may not be subject to
cost-sharing if it is billed as a preventive service.
One commenter recommended information be included to help
participants, beneficiaries, and enrollees understand the appropriate
point of contact for questions and complaints. This commenter
recommended issuers provide consumers with contact information for the
appropriate regulator--either the State Department of Insurance or the
appropriate Federal office.
The Departments appreciate this recommendation, but are declining
to finalize this additional requirement because the Departments are of
the view that plans and issuers already have avenues in place to
address participants', beneficiaries', and enrollees' complaints.
Several commenters recommended that additional notice disclaimers
be provided. One commenter suggested that the final rules require a
statement that cost-sharing liability estimates may differ from actual
costs, depending on changes after claims are processed. Another
commenter recommended that the Departments develop model disclaimers
stating that quoted amounts for drugs may be time-limited and subject
to manufacturer pricing practices. Another commenter recommended the
addition of consumer disclaimers indicating that ``services subject to
the cost estimate may be provided and billed by providers associated
with multiple payer contracts which will result in multiple EOBs.''
Another commenter recommended the Departments permit plans to require
participants, beneficiaries, and enrollees to review and acknowledge a
disclaimer prior to viewing or searching for any pricing information,
which would help ensure that consumers understand that what they are
receiving may not be an accurate estimate of their total out-of-pocket
costs. Another commenter recommended that the presentation of the out-
of-network information make clear that the issuer is unable to provide
an estimate for the full cost of the service. The commenter suggested
that this disclosure should be presented on the same screen as the
maximum allowed amount and the participant, beneficiary, or enrollee's
cost liability because it may be unclear that the maximum allowed
amount is not the total cost of care. Another commenter requested that
the Departments add a requirement that plans or issuers provide
participants, beneficiaries, or enrollees with meaningful and simple
explanations regarding emergency care, including informing them of the
prudent layperson standard.\117\ Another commenter that recommended
plans and issuers be required to provide explanatory information about
the operation of their plans, including glossaries of relevant terms
and explanations of insurance plan features and health care services,
including in-network and out-of-network costs, limited plan designs,
deductibles, telehealth, and additional features in consumer-friendly
language.
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\117\ 42 CFR 438.114.
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The Departments decline to adopt these commenters' suggestions for
additional notice disclaimers. The Departments are of the view that
adopting these additional requirements would add to the burden imposed
on plans and issuers without creating corresponding benefits for
participants, beneficiaries, or enrollees that would outweigh the
burden, and would be unhelpfully prescriptive regarding the information
plans and issuers are required to convey to these individuals. Existing
plan and issuer resources for this information, such as the uniform
glossary required under the Summary of Benefits and Coverage (SBC)
final regulation \118\ provide consumer-friendly language definitions
of insurance terms. Additionally, in response to comment, the
Departments are providing flexibility to plans and issuers to design
their internet-based tools and disclosures so that they meet the needs
of their participants, beneficiaries, and enrollees. However, the
Departments encourage plans and issuers to provide additional
information at their discretion, if appropriate. The final rules adopt
these provisions as proposed, with one correction of a typographical
error (``bill'' rather than ``billed'') in 26 CFR 54.9815-
2715A2(b)(1)(vii)(A), 29 CFR 2590.715-2715A2(b)(1)(vii)(A), and 45 CFR
147.211(b)(1)(vii)(A) and a clarification that this statement element
is only required if balance billing is permitted under state law, with
paragraph (b)(1)(vii)(D) redesignated as paragraph (b)(1)(vii)(F), and
with new paragraphs (b)(1)(vii)(D) and (E) added,
[[Page 72204]]
as described earlier in this section of this preamble.
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\118\ 80 FR 34292 (Jun. 16, 2015).
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2. Required Methods for Disclosing Information to Participants,
Beneficiaries, or Enrollees
Section 1311(e)(3)(C) of PPACA requires that cost-sharing
information be made available through an internet website and other
means for individuals without access to the internet. Therefore, in the
proposed rules, the Departments proposed to require that group health
plans and health insurance issuers disclose to participants,
beneficiaries, or enrollees the cost-sharing information described
earlier in this preamble in two ways: (1) Through a self-service tool
that meets certain standards and is available on an internet website,
and (2) in paper form.
a. First Delivery Method: Internet-Based Self-Service Tool
Under the proposed rules, plans and issuers would be required to
make available a self-service tool on an internet website for their
participants, beneficiaries, or enrollees to use, without a
subscription or other fee, to search for cost-sharing information for
covered items and services. The tool would be required to allow users
to search for cost-sharing information for a covered item or service
provided by a specific in-network provider, or by all in-network
providers. The tool also would be required to allow users to search for
the out-of-network allowed amount for a covered item or service
provided by out-of-network providers. The tool would be required to
provide users real-time responses that are based on cost-sharing
information that is accurate at the time of the request.
Many commenters supported the Departments' proposal to require
plans and issuers to make available personalized out-of-pocket cost
information for all covered health care items and services through an
internet-based self-service tool and urged the Departments to finalize
this section of the regulation as proposed. Some commenters recommended
the Departments identify a core set of functional requirements that
must be included in all price transparency tools. Commenters suggested
that these functional requirements should ensure all people enrolled in
commercial products have access to the same baseline functionality,
while providing enough flexibility for issuers to develop, and iterate
on, innovative existing internet-based self-service tools. Examples of
functional requirements include providing tailored information to
participants, beneficiaries, or enrollees on their benefit summary
(plan coverage, copayments, deductibles); being able to browse by
service category (for example, medical specialty, procedures, drugs,
imaging, labs) or diagnosis; or being able to select from an A-Z list
of popular searches or episodes of care. One commenter recommended the
following functional requirements: (1) Provide individuals with their
personal health plan details, a digital ID card, deductible and copay
information, the ability to download and view claims, and information
on provider network status and quality performance; (2) display cost
and quality information in clear, user-friendly language to facilitate
and inform health care decisions; (3) allow consumers to compare
facilities and clinicians based on curated cost estimates, common
quality measures, value metrics, and patient ratings; (4) offer
personalized out-of-pocket cost estimates for episodes of care,
services, and prescriptions, calculated using their specific health
plan design before they receive care; (5) comply with all state and
Federal health care data privacy and security laws, including the
Health Insurance Portability and Accountability Act (HIPAA) privacy and
security rules and the Health Information Trust (HITRUST) Common
Security Framework.
The Departments agree that the self-service tool requirements
should ensure all people enrolled in group health plans and health
insurance coverage have access to the same baseline functionality,
while providing enough flexibility for plans and issuers to develop and
iterate on innovative internet-based self-service tools. It is the
Departments' intent that the required elements be broad enough to avoid
being overly prescriptive for plans and issuers. The Departments agree
that certain additional content elements could be beneficial to
participants, beneficiaries, and enrollees, including general benefit
summary information and quality metrics. However, the primary initial
goal of the self-service tool is to provide personalized out-of-pocket
cost estimates for episodes of care, services, and prescriptions, and
to provide transparency around the pricing elements that determine out-
of-pocket costs. Therefore, the Departments are not inclined to require
additional elements unrelated to this primary goal at this time. The
Departments note that the intent of the final rules is to provide a
minimum standard for the disclosure of pricing information to lay a
foundation for transparency in coverage and the Departments may
consider additional disclosure requirements to build upon the final
rules in the future. To that end, the Departments are finalizing the
required content elements for the self-service tool as described
earlier in this preamble to the final rules. The final rules include a
change regarding the search function related to out-of-network allowed
amounts. Specifically, that element is modified to include the other
metrics that a plan or issuer is permitted to use in place of out-of-
network allowed amounts, as discussed earlier in this preamble in
connection with the fourth content element that must be disclosed to
participants, beneficiaries, and enrollees. Additionally, the
Departments encourage plans and issuers to add additional elements to
their tools according to the needs of the populations they serve.
In order for plans and issuers to provide accurate cost-sharing
information, the Departments noted that the participant, beneficiary,
or enrollee will have to input certain data elements into the tool.
Therefore, under the proposed rules, plans and issuers would be
required to make available a tool that allows users to search for cost-
sharing information: (1) By billing code (for example, Current
Procedural Terminology (CPT) Code 87804) or, (2) by a descriptive term
(for example, ``rapid flu test''), at the option of the user. The tool
also would be required to allow users to input the name of a specific
in-network provider in conjunction with a billing code or descriptive
term, to produce cost-sharing information, and a cost-sharing liability
estimate for a covered item or service provided by that in-network
provider. Regarding a request for cost-sharing information for all in-
network providers, under the proposed rules, if a plan or issuer
utilizes a multi-tiered network, the tool would be required to produce
the relevant cost-sharing information for the covered item or service
for individual providers within each tier. In the proposed rules, the
Departments explained that to the extent that cost-sharing information
for a covered item or service under a plan or coverage varies based on
factors other than the provider, the tool would also be required to
allow users to input sufficient information for the plan or issuer to
disclose meaningful cost-sharing information. For example, if the cost-
sharing liability estimate for a prescription drug depends on the
quantity and dosage of the drug, the tool would be required to allow
the user to input a quantity and dosage for the drug for which he or
she is seeking cost-
[[Page 72205]]
sharing information. Similarly, to the extent that the cost-sharing
liability estimate varies based on the facility at which an in-network
provider furnishes a service (for example, at an outpatient facility
versus in a hospital setting), the tool would be required to either
permit a user to select a facility, or display in the results cost-
sharing liability information for every in-network facility at which
the in-network provider furnishes the specified item or service.
It remains the Departments' understanding that a plan or issuer may
require certain information, in addition to the identification of a
covered item or service, before it can provide an out-of-network
allowed amount for a covered item or service, and that plans and
issuers may have different ways of establishing an allowed amount for
covered items or services from an out-of-network provider (such as by
zip code or state). Therefore, under the final rules, plans and issuers
are required to allow users to search for the out-of-network allowed
amount or other metric as discussed in the fourth content element, for
a covered item or service provided by out-of-network providers, by
inputting a billing code or descriptive term and the information that
is necessary for the plan or issuer to produce the out-of-network
allowed amount (such as the zip code for the location of the out-of-
network provider).
To the extent a user's search returns multiple results, the tool
would be required to have functionalities that would allow users to
refine and reorder results (also referred to as sort and filter
functionalities) by geographic proximity of providers and the amount of
estimated cost-sharing liability. The Departments solicited comment on
whether the tool should be required to have additional refining and
reordering functionality, including whether it would be helpful or
feasible to refine and reorder by provider subspecialty (such as
providers who specialize in pediatric psychiatry), or by the quality
rating of the provider, if the plan or issuer has available data on
provider quality.
Some commenters stated that it is unrealistic to expect consumers
to know and understand CPT/Diagnosis Related Group (DRG)/International
Classification of Disease-10 (ICD-10) codes and supported the inclusion
of descriptive terms. One commenter stated that search capability by
standard medical terms will be crucial, and that, to be successful,
this type of search system will need to be broad and user-friendly,
accommodating an extensive range of consumer inputs and terms. Another
commenter recommended the tool also contain a layperson-friendly
descriptor of the service to improve understanding. Other commenters
lauded the requirement that issuers must use plain language when
disclosing price information, which would ensure that patients can
understand their expected costs without expert knowledge of insurance
language and practices. Some commenters recommended that the
Departments follow industry standards and use the CMS-approved National
Correct Coding Initiative (CCI) for consumer searches, as well as for
any information relating to standards for services that fall into
bundled payment arrangements.
One commenter expressed concern that the conversion of thousands of
CPT codes into plain English by thousands of health plans, carriers,
and TPAs is inefficient, and will result in inconsistencies across the
country. For example, there are multiple CPT codes for procedures in a
hospital that differ in price depending upon severity, which is often
unknown when a procedure is first recommended.
The Departments agree that it is essential for tools to support
descriptive terms because consumers may not be familiar with specific
procedure codes. The Departments acknowledge the challenge of
converting CPT code descriptions to plain language but are of the view
that the benefit to consumers outweighs the burden to plans and
issuers. The Departments also acknowledge the potential value in
requiring the use of CCI standards but are of the view that their use
should be voluntary, not required, in order to avoid placing additional
burdens on plans and issuers in the absence of clear benefits to
consumers. As noted earlier in this preamble, the intent of the final
rules is to provide foundational requirements and to allow plans and
issuers maximum flexibility to build upon existing tools while
providing consumers with reliable cost estimates. The Departments also
highlight that the phased implementation of the final rules affords
plans and issuers additional time to address administrative challenges.
Accordingly, the final rules adopt this provision as proposed.
One commenter sought clarification that the tool is not required to
support searches with multiple parameters at the same time (for
example, by provider name and medical code at once). Another commenter
suggested that the Departments allow that, as one permissible method,
the tool may provide for geographic proximity based on a zip code
entered by the participant, beneficiary, or enrollee to enable the
consumer to choose whether to search based on the proximity to home or
work or some other location.
The self-service tool must allow users to search for cost-sharing
information for a covered item or service by inputting the name of a
specific in-network provider in conjunction with a billing code or
descriptive term, as well as other relevant factors like location of
service, facility name, or dosage. For covered items and services
provided by out-of-network providers, the tool should provide the out-
of-network allowed amount, percentage of billed charges, or other rate
that provides a reasonably accurate estimate of the amount a plan or
issuer will pay by allowing consumers to input a billing code,
descriptive code, or other relevant factor, such as location. In
addition, the final rules adopt the requirement that the tool must
allow the user to refine and reorder search results based on geographic
proximity of in-network providers. The final rules require refining and
reordering search results only for in-network providers, as the
Departments are of the view that doing so for out-of-network providers
would be too burdensome at this stage. The Departments expect that in
order for beneficiaries, participants, and enrollees to search for out-
of-network providers, they would have to input, at minimum, the billing
code or name of an item or service and the geographical location of the
provider. In addition, in order to align with revisions to the fourth
content element allowing flexibility to provide another rate instead of
the out-of-network allowed amount, the final rules have been revised to
reflect that participants, beneficiaries, and enrollees can search for
the out-of-network allowed amount, the percentage of billed charges, or
other rate that provides a reasonably accurate estimate of the amount a
plan or issuer will pay for a covered item or service provided by out-
of-network providers. This ``other rate'' is also included in paragraph
(b)(2)(i)(B)(2) of the final regulations for consistency.
Regarding refining and reordering features, one commenter suggested
that the tools include an ability to display only in-network providers
and an ability to filter or sort by provider quality if a quality
metric is made available. Three commenters requested that requirements
not limit plans to developing provider and service filters that only
account for price and geographic proximity: they suggested that the
tools should also have functionality filters based on sub-specialty and
a measure of value. Another commenter requested that any
[[Page 72206]]
additional functionality relating to refining and reordering search
results be optional for plans and issuers at this time.
One commenter stated that, to enhance the accuracy of the tool and
better account for fluctuations in cost-sharing amounts, the
Departments should require that it be configured to allow users to
self-select health characteristics (for example, chronic conditions,
body mass index) in order to further personalize its outputs for
consumers. The commenter recommended that payers be given flexibility
to dictate the specific health characteristics to be included in their
tools based on their participant, beneficiary, and enrollee
populations, the types of products that they offer, and other elements
that might cause cost-sharing estimates to fluctuate.
The Departments agree that plans and issuers should have
flexibility to design tools that can maximize consumer utility and
acknowledge that the suggested additions to search functionality could
be beneficial to consumers. However, the Departments decline to require
the adoption of these suggestions to preserve plans and issuers'
discretion regarding the most effective way to provide search results
and to avoid being overly burdensome or prescriptive.
The Departments intend that plans and issuers create user-friendly
internet-based self-service tools, but the proposed rules did not
include a definition for ``user-friendly'' because there are a variety
of ways a tool can be designed to be user-friendly. The Departments
wish to preserve plan and issuer flexibility to create tools that are
best for their participants, beneficiaries, or enrollees, including by
soliciting user feedback and consumer testing in the development of
their tools. However, it is the Departments' view that a user-friendly
tool would mean a tool that allows intended users to search for the
cost-sharing information outlined in the final regulations efficiently
and effectively, without unnecessary steps or effort. The Departments
are of the view that plans and issuers can look to Federal plain
language guidelines, ERISA requirements for a Summary Plan
Description's method of presentation at 29 CFR 2520.102-2(a), and
general industry standards for guidance when designing and developing
their internet-based self-service tools.\119\
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\119\ ``Federal plain language guidelines.'' United States
General Services Administration. Available at: https://www.plainlanguage.gov/guidelines/.
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The Departments also received comments on whether the self-service
tool should be made available through an internet website, through a
mobile application, or both. The proposed rules provided that the self-
service tool be made available on an internet website to be consistent
with section 1311(e)(3)(C) of PPACA, which provides that ``at a
minimum,'' cost-sharing information be made available through an
``internet website.'' However, the Departments sought feedback on
whether this term should be interpreted to include other comparable
methods of accessing internet-based content. The statute was enacted in
2010, when the primary mode of accessing internet-based content was
through a personal computer. Since that time, ownership of mobile
devices with internet access and use of internet-based mobile
applications has become much more common. The Departments acknowledged
that there may be technical differences between a website and other
methods of viewing internet-based content, such as mobile applications.
However, as stated in the proposed rules, the Departments also
understand that technology evolves over time, and it is the
Departments' view that Congress did not intend to limit the ability to
access information via alternative methods of viewing internet-based
content that may be available now or in the future.
The Departments acknowledged that mobile applications may provide
benefits beyond those of traditional websites. Due to the portability
of mobile devices, a self-service tool that is made available through a
mobile application might provide participants, beneficiaries,
enrollees, and their health care providers greater opportunities to use
the tool together at the point of care to evaluate treatment options
based on price. The Departments further acknowledged that mobile
applications, as a general matter, may offer greater privacy and
security protections than an internet website, accessed either from a
mobile device or a computer.\120\ Accordingly, the Departments sought
comment on whether the final rules should permit the proposed
disclosure requirements to be satisfied with a self-service tool that
is made available through a website or comparable means of accessing
the internet, such as a mobile application, or whether multiple means,
such as websites and mobile applications, should be required. The
Departments also sought comment on the relative resources required for
building an internet website versus an internet-based mobile
application.
---------------------------------------------------------------------------
\120\ Kassner, M. ``Apps vs. mobile websites: Which option
offers users more privacy?'' Tech Republic. September 30, 2016.
Available at https://www.techrepublic.com/article/apps-vs-mobile-websites-which-option-offers-users-more-privacy/; see also Colburn,
K. ``Is using a banking app safer for managing your account
online?'' AZcentral. September 17, 2018. Available at https://www.azcentral.com/story/money/business/tech/2018/09/17/online-banking-app-safety-security-smartphone-tech-tips/1212736002/; see
also Ogata, M., et al. ``Vetting the Security of Mobile
Applications.'' National Institute of Standards and Technology,
United States Department of Commerce. April 2019. Available at:
https://doi.org/10.6028/NIST.SP.800-163r1.
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Some commenters recommended that the Departments finalize the
proposed rules with the self-service tool requirement satisfied by
being made available through a website or comparable means of accessing
the internet. Others believed that plans and issuers should be free to
determine whether to offer a mobile app, an internet website, or both.
One commenter stated the resources necessary for building and
supporting a mobile application are significantly greater than building
a website and did not support a proposal to require multiple
applications, while other commenters supported a mobile application to
enable patients to make cost-effective decisions in the doctor's
office. Another commenter recommended both a mobile application and an
internet-based platform with fully responsive internet-based design.
Two commenters recommended that the requirements not preclude a plan,
issuer, or TPA from developing other means of electronic delivery
beyond internet disclosure.
The Departments have considered these comments and are of the view
that requiring an internet website, as opposed to a comparable means of
accessing the internet, such as a mobile application or both, ensures
access to a broader set of consumers while limiting the burden on plans
and issuers to produce both an internet site and a mobile application.
Internet websites can be accessed on mobile devices and people without
access to the internet or mobile devices can access tools through
resources where internet access may be available, such as a local
library. Conversely, if the tool were available only through a mobile
device, people without a capable mobile device would not have access to
the tool. The final rules, therefore, adopt the requirement that the
self-service tool be provided via internet website; however, the
Departments encourage plans and issuers to also provide a mobile
application version in addition to an internet website.
[[Page 72207]]
b. Second Delivery Method: Paper Form
Paragraph (e)(3)(C) of section 1311 of PPACA specifies that at a
minimum, cost-sharing information be made available to an individual
through an internet website and such other means for individuals
without access to the internet. Therefore, the proposed rules included
a proposal that group health plans and health insurance issuers would
have to furnish, at the request of the participant, beneficiary, or
enrollee, without a fee, all of the information required to be
disclosed under paragraph (b)(1) of the proposed regulations, as
outlined earlier in this preamble, in paper form. Further, the proposed
rules included a proposal that a plan or issuer would be required to
provide the information in accordance with the requirements under
paragraph (b)(2)(i) of the proposed regulations and as described
earlier in this preamble. That is, the plan or issuer would be required
to allow an individual to request cost-sharing information for a
discrete covered item or service by billing code or descriptive term,
according to the participant's, beneficiary's, or enrollee's request.
Further, the plan or issuer would be required to provide cost-sharing
information for a covered item or service in connection with an in-
network provider or providers, or an out-of-network allowed amount for
a covered item or service provided by an out-of-network provider,
according to the participant's, beneficiary's, or enrollee's request,
permitting the individual to specify the information necessary for the
plan or issuer to provide meaningful cost-sharing liability information
(such as dosage for a prescription drug or zip code for an out-of-
network allowed amount). To the extent the information the individual
requests returns more than one result, the individual would also be
permitted to request that the plan or issuer refine and reorder the
information disclosed by geographic proximity and the amount of the
cost-sharing liability estimates.
The Departments proposed that this information would be required to
be mailed to a participant, beneficiary, or enrollee via the U.S.
Postal Service or other delivery system no later than 2 business days
after a participant's, beneficiary's, or enrollee's request is
received.
Two commenters supported the Departments' proposal to allow
individuals the ability to access their information through electronic
means or via paper form, given that many Americans lack access to high-
speed internet services. Some commenters opposed the requirement to
deliver the cost-sharing information to participants in paper form due
to administrative burden, while others recommend limiting the
requirements. Several recommended the timeframe to respond be expanded,
including a range of 5 days to 10 days. One commenter requested that
the compliance time for producing paper copies of personalized
information be consistent with current Federal requirements for
furnishing paper copies of the SBC, Summary Plan Description, or
Consolidated Omnibus Budget Reconciliation Act (COBRA) notices. Other
commenters expressed concern about volume, given that a participant,
beneficiary, or enrollee could request cost estimates for all in-
network providers of a given service, which could be tens of thousands
of providers, resulting in thousands of pages of results. Some
recommended a reasonable limit to the volume of information that would
be provided in response to any single request for a covered item or
service--for, example, no more than 20 or 25 providers per request.
Several commenters recommended that the Departments reconsider
mandating paper responses ``without a fee.'' While these commenters did
not support charging participants, beneficiaries, or enrollees for
access to cost-sharing information in general, they asserted that it is
unreasonable to expect health plans to provide what could easily be
boxes worth of information in response to multiple requests per
enrollee.
Nothing in the proposed rules would have prohibited a plan or
issuer from providing participants, beneficiaries, or enrollees with
the option to request disclosure of the information required under
paragraph (b)(1) of the proposed regulations through other methods
(such as, over the phone, through face-to-face encounters, by
facsimile, or by email). The Departments requested comment on these
proposed disclosure methods, including whether additional methods of
providing information should be required, rather than permitted. The
Departments were particularly interested in feedback on whether plans
and issuers should be required to provide the information over the
phone, or by email, at the request of a participant, beneficiary, or
enrollee.
Several commenters requested alternatives to the paper disclosure,
particularly a phone option. One commenter recommended the final rules
require that plans or issuers set up a designated toll-free number that
participants, beneficiaries, or enrollees can call to receive pricing
information, in addition to offering that as an option on their main
consumer information phone line. Two commenters urged the Departments
to consider making the second form of disclosure one of the plan or
issuer's choice (that is, paper or phone service). Conversely, one
commenter stated that the volume and complexity of information that a
given request could produce would preclude providing this information
over the phone or in-person. Another commenter recommended the
alternative format to include telephone, in-person, or fax. One
commenter recommended emailing digital versions of the paper requests
to a participant's, beneficiary's, or enrollee's inbox at the
participant's, beneficiary's, or enrollee's request, and another
requested that if results were emailed, the same information should not
also need to be provided via paper form.
The Departments acknowledge commenters' concerns that the volume of
paper requests could be unwieldy. To that end, the final rules adopt
the requirement that cost-sharing information be provided in paper
form, but a plan or issuer may limit any results for a paper request to
20 providers per request, as suggested by some commenters. The
Departments are of the view that the commenters' suggestion of limiting
paper request to 20 providers per request is a reasonable approach to
balancing the burdens on plans and issuers with the benefits of
providing consumers with enough information to be able to compare cost
and provider options. The final rules provide an additional flexibility
that, to the extent participants, beneficiaries, or enrollees request
disclosure by another means (for example, by phone or email), plans and
issuers may provide the disclosure through the means requested by the
participant, beneficiary, or enrollee, provided the participant,
beneficiary, or enrollee agrees that disclosure through such means is
sufficient to satisfy the request and the request is fulfilled at least
as rapidly as required for the paper method. The Departments further
acknowledge that requiring plans and issuers to set up a designated
toll-free number for pricing information could be beneficial to
participants, beneficiaries, and enrollees, but are not requiring this
step given the Departments' view that its burden outweighs its benefit
in light of the other available disclosure methods, including the
flexibility to provide this information via the preferred disclosure
method of the participant, beneficiary, or enrollee.
[[Page 72208]]
3. Special Rule To Prevent Unnecessary Duplication
a. Insured Group Health Plans
The proposed rules included a special rule to streamline the
provision of the required disclosures and to avoid unnecessary
duplication of the disclosures with respect to group health insurance
coverage. The Departments are finalizing this special rule, which
provides that, to the extent coverage under a plan consists of fully-
insured group health insurance coverage, the plan satisfies the
requirements of the final rules if the plan requires the issuer
offering the coverage to provide the information pursuant to a written
agreement between the plan and issuer. For example, if a plan and an
issuer enter into a written agreement under which the issuer agrees to
provide the information required under the final rules, and the issuer
fails to provide full or timely information, then the issuer, but not
the plan, has violated the transparency disclosure requirements.\121\
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\121\ Under section 4980D(d)(1) of the Code, the excise tax for
group health plans failing to satisfy the final rules is not imposed
on a small employer (generally fewer than 50 employees) which
provides health insurance coverage solely through a contract with an
issuer on any failure which is solely because of the health
insurance coverage offered by the issuer.
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Many commenters requested that the Departments extend the special
rule to self-insured group health plans that are administered by an
administrative service organization or other TPA. These commenters
stated that self-insured plan sponsors that contract in good faith with
their TPAs to comply with the reporting requirements should be held
harmless with respect to compliance obligations and liability under
this regulation because in many instances a provider network is merely
rented from a TPA, necessary information may not be held by the plan
itself, and because liability could be contractually assigned to the
TPA.
Section 2715A of the PHS Act provides the authority for the
Departments to require this information from plans and issuers, but not
TPAs. Therefore, it is ultimately the responsibility of the plan or
issuer to provide the information required by the final rules.
Nonetheless, the Departments note that nothing in the final rules
prevents a self-insured plan from contracting with another party to
provide the required disclosure, including, to the extent permitted
under other Federal or state law, entering into an agreement for the
other party to indemnify the plan in the event the other party fails to
make the full or timely disclosure required by the final rules.
However, the plan must monitor the other party to ensure that the
entity is providing the required disclosure. Moreover, the Departments
are of the view that the special rules providing certain safe harbors
for actions taken in good faith as further described later in this
preamble provide adequate protections for self-insured plans. The final
rules also include the addition of the phrase ``insured group health
plans'' to clarify that this special rule applies to insured group
plans.
b. Other Contractual Arrangements
The Departments also received requests for clarification about the
responsibility of employer plan sponsors that offer benefits under a
level-funded arrangement. In general, under a level-funded arrangement,
a plan sponsor self-insures expected claims and purchases stop-loss
insurance for claims that exceed a specified threshold. Group health
plans that are offered through a level-funded arrangement are subject
to the final rules. Just like self-insured plans that are not level-
funded, nothing in the final rules prevents a level-funded plan from
contracting with another party to provide the required disclosures, but
the level-funded plan remains liable for compliance with the final
rules, and must monitor the other party to ensure that the entity is
providing the required disclosure.
In several of the comments that addressed the special rule to
prevent unnecessary duplication, commenters requested that the
Departments permit plans and issuers to fulfill pricing disclosure
requirements for prescription drugs through a third-party tool, such as
a PBM tool. The Departments agree that this approach is permissible
under the final rules. The Departments recognize that self-insured
plans may rely on written agreements with other parties, such as PBMs,
to obtain the necessary data to comply with the disclosure
requirements. A plan or health insurance issuer may satisfy the
requirements for prescription drug items and services under paragraph
(b) by entering into a written agreement under which another party
(such as a PBM or other third-party) provides the information required
by paragraph (b) related to prescription drugs in compliance with this
section. Nonetheless, if a plan or issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with the final rules, the plan or issuer may
be held responsible for violating the transparency disclosure
requirements of the final rules for the same reasons explained above in
connection with self-insured plans entering into agreements with TPAs.
c. Application to Account-Based Arrangements
Another commenter sought clarification about the responsibility of
employer plan sponsors that offer the following types of coverage to
employees: (1) Individual coverage health reimbursement arrangements
(HRAs); (2) qualified small employer HRAs (QSEHRAs); and (3) flexible
spending arrangements (FSAs) that are not fully integrated with group
major medical coverage, stating that these types of plans were not
explicitly addressed in the exemptions and the anti-duplication
provisions outlined in the proposed rules.
The final rules do not apply to account-based group health plans,
such as HRAs, including individual coverage HRAs, or health FSAs.
QSEHRAs are not group health plans and are, thus, not subject to the
requirements of section 2715A of the PHS Act.\122\ Therefore, these
types of arrangements are not required to comply with the final rules.
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\122\ Section 9831(d)(1) of the Code; section 733(a)(1) of
ERISA; and section 2791(a)(1) of the PHS Act.
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4. Privacy, Security, and Accessibility
The requirements for group health plans and health insurance
issuers to provide cost-sharing liability estimates and related cost-
sharing information will operate in tandem with existing state and
Federal laws governing the privacy, security, and accessibility of the
information that will be disclosed under these disclosure requirements.
For example, the Departments are aware that the content to be disclosed
by plans and issuers may be subject to the privacy, security, and
breach notification rules under HIPAA or similar state laws. Nothing in
the final rules is intended to alter or otherwise affect plans',
issuers', and other entities' data privacy and security
responsibilities under the HIPAA rules or other applicable state or
Federal laws.
The Departments also expect that plans and issuers will follow
applicable state and Federal laws regarding persons who may or must be
allowed to access and receive the information that is required to be
disclosed under the final rules. The final rules refer to such persons
as ``authorized representatives'' and do not establish any new class of
persons or entities who are authorized
[[Page 72209]]
to access the information specified by the final rules.
One commenter expressed concerns about potential privacy violations
related to implementation and compliance with the proposed measure.
This commenter stated that all entities need to be made aware of their
existing privacy and data-security responsibilities and that states and
Federal regulators need to be diligent about compliance and
enforcement. This commenter further stated it is important to note that
employers, TPAs, and carriers may incur increased costs related to
complying with the proposed rules regarding potential data breaches,
increased liability, and cyber-coverage costs that could impact plan
premiums.
The Departments agree that it is important that entities subject to
the final rules be aware of their privacy and data-security
responsibilities. Accordingly, the Departments are finalizing, as
proposed, a provision that reminds plans and issuers of their duty to
comply with requirements under other applicable state or Federal laws,
including requirements governing the accessibility, privacy, or
security of information, or those governing the ability of properly
authorized representatives to access participant, beneficiary, or
enrollee information held by plans and issuers.
The Departments further appreciate the concern that employers,
TPAs, and issuers may incur cybersecurity costs related to providing an
online tool that provides some access to participant, beneficiary, and
enrollee protected health information (PHI). However, given the
Departments' understanding that as many as 94.4 percent of surveyed
plans and issuers already maintain and operate an internet-based self-
service tool,123 the Departments anticipate any additional
costs associated with cybersecurity will not be substantial.\124\ The
Departments have otherwise evaluated the burden of operating an
internet-based self-service tool in section VI, later in this preamble.
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\124\ Sharma A., Manning, R., and Mozenter, Z. ``Estimating the
Burden of the Proposed Transparency in Coverage Rule.'' Bates White
Economic Consulting. January 27, 2020. Available at: https://www.bateswhite.com/newsroom-insight-Transparency-in-Coverage-Rule.html.
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One commenter expressed concern that certain requests for cost-
sharing information could include items and services that may reveal
particularly sensitive health information (for example, information
related to substance abuse, mental health, or HIV). This commenter
recommended the Departments provide carve-outs so that plans and
issuers are not required to disclose such information through unsecured
methods of communication (for example, email or phone). Alternatively,
they recommended that the Departments provide more clarity or examples
of when plans and issuers are not required to disclose certain
information to comply with HIPAA and other Federal and state privacy
laws.
The Departments remind stakeholders that current privacy and
security requirements applicable under HIPAA rules and other applicable
Federal requirements continue to apply under these rules. As noted
earlier in this section of the preamble, the final rules are not
intended to alter or otherwise affect plans', issuers', or other
entities' responsibilities under HIPAA or other applicable Federal
privacy laws. Furthermore, to the extent that state laws are more
stringent regarding the disclosure of information subject to the final
rules, plans and issuers are required to comply with the relevant state
laws. The Departments acknowledge that there have been several recent
security breaches affecting plans, issuers, and third-party vendors
that may have compromised the PII and PHI of participants,
beneficiaries, and enrollees. As acknowledged elsewhere in this
preamble, privacy and security are important to the Departments and,
while outside the scope of this rule, these are issues the Departments
will continue to monitor. In light of existing risks and new risks that
may arise as a result of increased innovation in the health care space,
the Departments encourage plans and issuers to continue to educate
their participants, beneficiaries, and enrollees about these risks and
about ways to minimize or prevent unintended usage or sharing of their
health data and encourage consumers to pay close attention to any new
internet-based tools or applications they may choose to use.
C. Requirements for Public Disclosure of In-Network Rates, Historical
Allowed Amount Data, and Prescription Drug Pricing Information for
Covered Items and Services From In- and Out-of-Network Providers
As explained earlier in this preamble and in the proposed rules,
the Departments proposed to exercise specific authority under section
1311(e)(3)(A)(vii) and (ix) of PPACA (as applied to group health plans
and health insurance issuers in the individual and group markets
through section 2715A of the PHS Act), which requires plans and issuers
to publicly disclose information on cost-sharing and payments with
respect to any out-of-network coverage and any other information the
Secretary of HHS determines to be appropriate to enhance transparency
in health coverage. Consistent with this authority, the Departments
proposed for plans and issuers to make public negotiated rates with in-
network providers and data outlining the different amounts a plan or
issuer has paid for covered items or services, including prescription
drugs, furnished by out-of-network providers. The Departments proposed
to require plans and issuers to make this information available in
machine-readable files that would include information regarding
negotiated rates with in-network providers, allowed amounts for all
covered items or services furnished by particular out-of-network
providers, and other relevant information in accordance with specific
method and format requirements. The Departments proposed to require
plans and issuers to update this information on a monthly basis to
ensure it remains accurate. The Departments are finalizing these
policies and requirements with modifications to clarify the proposed
requirements and underlying policies, and to respond to commenter
suggestions and concerns.
The preamble to the proposed rules outlined several reasons why the
public disclosure of negotiated rates and historical out-of-network
allowed amounts is both appropriate and necessary for transparency in
coverage. First, the Departments asserted that the public availability
of negotiated rates and historical out-of-network allowed amounts would
empower the nation's 26.1 million uninsured consumers to make more
informed health care decisions.\125\ Uninsured consumers generally must
pay a provider's full charges for health care items and services.
Though negotiated rates will not apply to the uninsured, it will offer
a baseline when negotiating with providers. Pricing information is
critical to their ability to evaluate their service options and control
their health care spending. Uninsured consumers could also use publicly
available pricing information to find which providers offer the lowest
price, depending on the consumer's personal needs and priorities. The
Departments noted in the preamble to the proposed rules that provider
lists of standard charges often do not reflect the true cost of
particular
[[Page 72210]]
items and services.\126\ Again, although a provider's negotiated rates
with plans and issuers do not necessarily reflect the prices providers
charge to uninsured patients, uninsured consumers could use this
information to gain an understanding of the payment amounts a
particular provider accepts for a service. Uninsured patients or
participants, beneficiaries, or enrollees seeking care from an out-of-
network provider also may use this data to negotiate a price prior to
receiving an item or service or negotiate down a bill after receiving a
service.\127\
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\125\ Income, Poverty and Health Insurance Coverage in the
United States: 2019.'' United States Census Bureau. September 15,
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
\126\ Arora, V., Moriates, C., and Shah, N. ``The Challenge of
Understanding Health Care Costs and Charges.'' 17 AMA J. Ethics 1046
(2015). Available at: https://journalofethics.ama-assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11.
\127\ ``How to Research Health Care Prices.'' Wall Street
Journal. Dec. 4, 2009. Available at: https://guides.wsj.com/health/health-costs/how-to-research-health-care-prices/ (``Researching
health-care pricing online can also help after you've already had a
medical procedure, if you want to dispute a bill, negotiate it down,
or figure out if you've been overcharged.'').
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Second, the Departments stated in the proposed rules that
information regarding negotiated rates and historical out-of-network
allowed amounts is critical for any consumer, insured, or uninsured,
who wishes to evaluate available options for group or individual market
coverage. Specifically, negotiated rate information for different plans
or coverage and their in-network providers is key to consumers' ability
to effectively shop for coverage that best meets their needs at prices
they can afford, whether the consumer wishes to purchase new coverage
or change existing coverage. Publicly-available negotiated rate data
will assist all consumers in choosing the coverage that best meets
their needs in terms of deductible requirements, coinsurance
requirements, and out-of-pocket limits--all factors frequently
determined by plan's or issuer's in-network rates, including negotiated
rates, or out-of-network allowed amounts. This information, added to
plan premium information and benefit design (for example coinsurance
percentages), will give consumers an understanding of how affordable a
particular coverage option will be.
In the preamble to the proposed rules, the Departments noted that
publicly available historical allowed amount data for covered items and
services provided by out-of-network providers would enable consumers
who require specialized services to find the best coverage for their
circumstances. For instance, plans and issuers often place limitations
on benefits for specialized services, which causes many specialists to
reject insurance; this can make it difficult, if not impossible, for
consumers in need of certain services to find in-network providers in
their area who are accepting new patients or who have sufficient
availability or expertise to meet their needs. The Departments
understand, for example, that many speech therapists and pathologists
do not accept insurance because of the limitations plans and issuers
place on coverage for their services, such as annual visit limits on
speech therapy services. Accordingly, consumers who have a need for
such specialized services may base their coverage choices primarily, if
not solely, on a plan's or issuer's out-of-network benefits. Historical
data outlining different amounts paid to out-of-network providers will
enable consumers who rely on out-of-network providers to ascertain
potential out-of-network benefits among different plans and issuers.
Third, the Departments stated in the preamble to the proposed rules
that public disclosure of pricing information is necessary to enable
consumers to use and understand price transparency data in a manner
that will increase competition, potentially reduce disparities in
health care prices, and potentially lower health care costs. One of the
recognized impediments to increased competition for health care items
and services is the widespread lack of knowledge many consumers have
regarding health care pricing. In the preamble to the proposed rules,
the Departments noted that many consumers do not fully comprehend the
basics of health coverage, much less the more complex facets of the
health care system that can affect an individual's out-of-pocket cost
for items and services, including: Its specialized billing codes and
payment processes; the various specialized terms used in plan and
coverage contracts and related documents (such as copayment and
coinsurance); and the various billing and payment structures plans and
issuers use to compensate providers and assign cost-sharing liability
to individuals (for example, bundled payment arrangements).\128\
Pricing information is necessary to spur innovation that will help
educate consumers on how to get the most value out of their plan or
coverage. Making the required pricing information public could
facilitate and incentivize the design, development, and offering of
internet-based self-service tools and support services that are
necessary to address the general inability of consumers to use or
otherwise understand the available health care pricing information.
---------------------------------------------------------------------------
\128\ Satter, M. ``Survey: Most workers don't understand health
insurance.'' BenefitsPRO. September 30, 2016. Available at: https://www.benefitspro.com/2016/09/30/survey-most-workers-dont-understand-health-insuran/?slreturn=20190803010341 (a UnitedHealthcare Consumer
Sentiment Survey found that even though 32 percent of respondents
were using websites and mobile apps to comparison shop for health
care, only 7 percent had a full understanding of all four basic
insurance concepts: Plan premium, deductible, coinsurance, and out-
of-pocket maximum; although 60 percent of respondents were able to
successfully define plan premium and deductible, respondents were
not as successful in defining out-of-pocket maximum (36 percent) and
coinsurance (32 percent)).
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In developing the proposed rules, the Departments considered that,
due to the complexity of the health care system and the data that
drives plan and issuer payments for health care items and services,
such raw data is likely to be difficult for the average consumer to
understand and effectively use. As a result, the Departments determined
that proposing to make public negotiated rates with in-network
providers and historical payment data outlining out-of-network allowed
amounts would be appropriate because it would encourage innovation that
could ultimately help consumers understand and effectively use price
transparency information.
The Departments stated that the proposed requirement to make
pricing information publicly available could allow health care software
application developers and other innovators to compile, consolidate,
and present this information to consumers in a manner that allows
consumers to consider price as a factor when making meaningful
comparisons between different coverage options and providers.\129\ For
instance, third-party developers could develop mobile applications that
operate as look-up tools and permit comparison of prices for specific
services across plans. The tools could also allow consumers to access
their medical records or other information about their health care
utilization and create estimates based upon patient-specific
information. Ultimately, the Departments are of the view that improved
access and usability of this information has the potential to increase
health insurance literacy, consumerism, and competition, resulting in
more reasonable costs for health care items and services.
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\129\ The Departments recognize that implementation of the API
discussed in section III, Request for Information, could go even
further toward the goal of empowering application developers and
other innovators to support price transparency in the health care
market.
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Fourth, in the proposed rules the Departments noted that, along
with
[[Page 72211]]
consumers, sponsors of self-insured and fully-insured group health
plans are also disadvantaged by the lack of price transparency.\130\
Absent action taken such as through the final rules, health care cost
trends are expected to continue to outpace inflation, with employer-
sponsored large group plans' annual per employee costs expected to
increase between 5.5 to 9.0 percent over the next decade.\131\ Without
information related to what other plans or issuers are actually paying
for particular items and services, employer plans currently lack the
pricing information necessary to shop or effectively negotiate for the
best coverage for their participants and beneficiaries. In the proposed
rules, the Departments stated that public availability of pricing
information is appropriate to empower plans to make meaningful
comparisons between offers from issuers and evaluate the prices offered
by providers who wish to be included in their pool of in-network
providers. The Departments noted that the pricing information would
also assist employer plans that contract with TPAs or issuers to
provide a network of physicians. That information would provide
valuable data an employer plan could use to assess the reasonableness
of network access prices offered by TPAs and issuers by evaluating the
specific price providers in a TPA's or issuer's network are accepting
for their services.
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\130\ Whaley, C., et al. ``Nationwide Evaluation of Health Care
Prices Paid by Private Health Plans: Findings from Round 3 of an
Employer-Led Transparency Initiative.'' RAND Corporation. 2020.
Available at: https://www.rand.org/pubs/research_reports/RR4394.html.
\131\ Congressional Budget Office, ``The Budget and Economic
Outlook: 2019 to 2029.'' Congress of the United States Congressional
Budget Office. January 2019. Available at: https://www.cbo.gov/system/files/2019-03/54918-Outlook-3.pdf; see also ``Medical cost
trend: Behind the numbers 2020.'' PwC Health Research Institute.
June 2019. Available at: https://heatinformatics.com/sites/default/files/images-videosFileContent/pwc-hri-behind-the-numbers-2020.pdf.
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Armed with transparency data, employers could also use their
leverage to negotiate for lower prices for their participants and
beneficiaries and, potentially, if enough employers take action, it
could help lower health care prices.\132\ For instance, employers could
employ network and benefit design tools to move participants and
beneficiaries toward lower-priced providers and shift from less
favorable provider contracting models (such as a discounted-charge
contact, which can be vulnerable to list-price inflation) to more
favorable, alternative value-based contracting models (such as
reference-based pricing and bundled payment arrangements).\133\ As
stated elsewhere in this preamble, based on 2019 Census data, there are
183 million Americans enrolled in employer-sponsored health coverage
through a household member's employer at some point during the
year.\134\ Based on estimates of the United States population in 2019,
this would mean that more than 56 percent of the nation's insured
population has employer-sponsored coverage. Therefore, the ability of
employer plans to effectively negotiate pricing for coverage and
services could be a boon to competition in the health care market.
---------------------------------------------------------------------------
\132\ Whaley, C., et al. ``Nationwide Evaluation of Health Care
Prices Paid by Private Health Plans: Findings from Round 3 of an
Employer-Led Transparency Initiative.'' RAND Corporation. 2020.
Available at: https://www.rand.org/pubs/research_reports/RR4394.html.
\133\ Id.
\134\ ``Income, Poverty and Health Insurance Coverage in the
United States: 2019.'' United States Census Bureau. September 15,
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
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Fifth, the Departments stated in the proposed rules that public
disclosure of price transparency information is also appropriate
because it could assist health care regulators in carrying out their
duties to oversee issuers in their states, as well as in designing and
maintaining sustainable health care programs. Regulators may be able to
independently access, aggregate, and analyze the data to support
oversight of plans and issuers. For example, because the machine-
readable files must be updated regularly, regulators could use the
pricing information to identify trends in rates of items and services
over time or identify potentially collusive practices or substantial
price variations within a geographic area that may be in need of
additional monitoring or future regulatory action. It may also become
possible for regulators to use the pricing information related to items
and services to assist in better understanding and monitoring premium
rate fluctuations and increases in their respective markets; further
allowing them to assess whether the trend rates issuers use in their
rate filings are reasonable in order to assess whether proposed rates
should be approved. Because the in-network applicable rate data will be
reasonably current, regulators may be able to address potential
concerns more quickly than at present.
Local, state, and Federal agencies responsible for implementing
health care programs that rely on issuers to provide access to care
would be privy to actual pricing information that could inform their
price negotiations with issuers. Insights gained from research using
the pricing information could support regulators in their oversight of
plans and issuers and could also help identify new ideas for market
reforms to enhance the performance and efficiency of health insurance
markets.
The public availability of health care pricing information offers
researchers the ability to better understand the impact of specific
plan, issuer, and provider characteristics on negotiated rates and out-
of-network payments, evaluate and supplement existing models and
predictions, and formulate new policies and regulatory improvements to
improve competition and lower health care spending. Researchers have
already utilized localized and state-wide data to review trends in
issuer market share, issuer location, and covered services and their
corollary effects on consumer pricing and experience in the
market.\135\ They have also examined these similar effects on consumers
by provider market shares, structures, and offered similar data.
Expanding the availability of this data could allow for the expansion
and validation of these and other models and hypotheses. With larger
and more complete datasets, researchers could refine their policy and
regulatory suggestions regarding payment and delivery models, including
those that are most likely to mitigate upwards pricing pressure from
issuer, provider, consumer, and geographic factors. The release of this
data could also supplement ongoing efforts to help control health care
costs.
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\135\ See Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' The Review of Economics and Statistics. Volume. 101.
No. 4. September 30, 2019. Available at: https://www.mitpressjournals.org/doi/full/10.1162/rest_a_00765; see also Wu,
S. et al ``Price Transparency For MRIs Increased Use Of Less Costly
Providers And Triggered Provider Competition.'' Health Affairs.
August 2014. Available at: https://www.healthaffairs.org/doi/10.1377/hlthaff.2014.0168.
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The Departments acknowledge that these stakeholders, notably
researchers, may have access to some pricing data through existing
sources, such as the Health Care Cost Institute (HCCI) and databases
established through state health care price transparency efforts.
However, it is the Departments' understanding that these health care
pricing datasets are often costly to purchase, only contain older,
historical data, and generally only include de-identified plan data for
a limited number of plans and issuers who voluntarily participate in
the data collection.\136\
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\136\ For example, HCCI is expected to release their ``2.0''
dataset in December 2020. The ``2.0'' dataset includes over one
billion commercial claims and 60 million covered lives per year from
Aetna, Humana, Kaiser Permanente, and the Blue Cross Blue Shield
(BCBS) companies from 2012 through 2018. The data is nearly three
years old and will cost $45,000 annually on a per-project basis and
does not include other ``standard add-ons,'' such as data mergers.
Institutional membership prices will be customized for each
organization. Taken from ``Power Up Your Analytics on the Privately
Insured.'' Health Care Cost Institute. Available at: https://healthcostinstitute.org/images/pdfs/Health_Care_Cost_Institute_-_Power_Up_Your_Analytics.pdf. In addition to the HCCI dataset, BCBS
companies also sell their data through their analytics and
consulting platform, Blue Health Intelligence, with 20.3 billion
claims from 203 unique member organizations. The access price is not
listed on their website. More information is available at: https://www.bluehealthintelligence.com/.
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[[Page 72212]]
By contrast, the pricing information required through the final
rules would generally be current data for all plans and issuers and
will be available to the public free of charge. This data, where it is
related to in-network coverage, can also be tied back to specific plans
and issuers and the geographic regions in which they provide plans or
coverage. With access to the pricing data required through the final
rules, researchers may be able to design new studies that develop novel
insights into the health insurance markets. Stakeholders, including
employers, may be able to gain insights, inform oversight efforts,
negotiate improved terms for items and services, or make improvements
to insurance products, such as plans and issuers moving toward value-
based plan designs or broadening or narrowing networks based on
customer shopping habits. The pricing information could also support
market innovation and improvements by plans and issuers. For example,
researchers and industry experts could use pricing information to
establish baseline data to assist in identifying, designing, and
testing new or existing health care delivery and coverage models.
While all of these stakeholders stand to benefit from access to the
pricing information required through the final rules, the Departments
continue to be of the view that the ultimate beneficiaries of access to
pricing information are consumers. Indeed, public access to health care
pricing information could lead to more targeted oversight, better
regulations, market reforms to ensure healthy competition, improved
benefit designs, and more consumer-friendly price negotiations.
The Departments expressed the view that effective downward pressure
on health care pricing cannot be fully achieved without public
disclosure of pricing information. Standard economic theory holds that
markets work best when there is price competition.\137\ When consumers
shop for services and items based on price, providers and suppliers
typically compete to lower prices and improve quality.\138\ Based on
this understanding of standard economic principles and past experience,
the Departments are persuaded that innovators and other entities in the
health care market will be incentivized to innovate in the price
transparency and health care consumerism space once access to pricing
information that allows for meaningful evaluation of different options
for delivering health care items or services, coverage options, and
provider options becomes available.
---------------------------------------------------------------------------
\137\ ``FTC Fact Sheet: How Competition Works.'' United States,
Federal Trade Commission. Available at: https://www.consumer.ftc.gov/sites/default/files/games/off-site/youarehere/pages/pdf/FTC-Competition_How-Comp-Works.pdf.
\138\ Kessler, D., and McClellan, M. ``Is Hospital Competition
Socially Wasteful?'' 115 Q. J. of Econ. 577. May 2, 2000. Available
at: https://www.nber.org/papers/w7266.
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1. Information Required To Be Disclosed to the Public
The Departments are finalizing requirements, under 26 CFR 54.9815-
2715A3(b), 29 CFR 2590.715-2715A3(b), and 45 CFR 147.212(b), for plans
and issuers to make public applicable rates, including negotiated
rates, with in-network providers; data outlining the different billed
charges and allowed amounts a plan or issuer has paid for covered items
or services, including prescription drugs, furnished by out-of-network
providers; and negotiated rates and historical net prices for
prescription drugs furnished by in-network providers.\139\ The
Departments are of the view that public availability of in-network
applicable rates, including negotiated rates, billed charges and
historical out-of-network allowed amounts, and in-network negotiated
rates and historical net prices for prescription drugs is appropriate
and necessary to provide comprehensive effective transparency in
coverage, which may, in turn, empower consumers to make informed
decisions about their health care, spur competition in health care
markets, and slow or potentially reverse the rising cost of health care
items and services.
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\139\ As discussed in section II.B of this preamble, the
Departments are also finalizing requirements under 26 CFR 54.9815-
2715A2(b)(1)(iii)-(iv), 29 CFR 2590.715-2715A2(b)(1)(iii)-(iv), and
45 CFR 147.211(b)(1)(iii)-(iv) that plans and issuers include
negotiated rates and out-of-network allowed amounts within the
internet-based self-service tool.
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The vast majority of the commenters agreed with the Departments'
objectives of price transparency under the proposed rule. Many
commenters offered general support (in whole or in part) of the
proposed requirements for public disclosure of in-network negotiated
rates and out-of-network allowed amounts. One commenter supported the
public disclosure of out-of-network allowed amounts but expressed
concerns about disclosure of in-network negotiated rates.
Disclosure of Pricing Information Generally
Some commenters who offered support stated that the requirements
will help create more efficient and value-based health care systems by,
for example, encouraging plans and issuers to adopt innovative benefit
designs that push patients toward lower-cost care. Another commenter
who offered support stated that requiring plans and issuers to share
publicly the negotiated rates for in-network providers and allowed
amounts for out-of-network providers has the potential to increase
competition among issuers. One commenter stated that public disclosure
of negotiated rates is needed to address the provider consolidation
that is driving up health care costs and leading to more favorable
reimbursements to large hospitals with bargaining power. Another
commenter recommended the Departments reject arguments against
transparency that payment data should be protected as proprietary, and
adopt a presumption in favor of transparency.
The Departments received comments from state and local government
regulators who were supportive of the rules generally and provided
suggestions for improving the proposals. Regulators recognized that
greater transparency holds promise in improving pricing of health care
items and services in ways that improve consumer comprehension and
policymakers' ability to manage the health care system. One local
government commenter supported the goal of price transparency, but
voiced concern that the proposed rules might unintentionally drive up
the cost of health care. Individual consumers who submitted comments
offered general support and emphasized the importance of obtaining
pricing information in advance of receiving health care for their
personal health care decision-making. Some individual commenters noted
that consumers seek the price of a product or service in every other
sector prior to making a spending decision and should be able to do so
when purchasing health care. Other individual commenters stated their
support for policies that will help consumers choose whether to seek
care
[[Page 72213]]
from an in-network or out-of-network provider.
Many other commenters, comprised largely of health insurance
issuers and health care providers, offered support for the objective of
price transparency, but did not support the requirements for public
disclosure of in-network provider rates and out-of-network allowed
amounts, expressing particular concerns about the in-network provider
rate disclosure requirements
Commenters stated that, as proposed, the disclosure of payer-
specific negotiated rates could distort the markets, creating an
unbalanced focus on costs at the expense of other factors influencing
market dynamics, such as quality, efficiency, and effectiveness. Some
commenters stated that negotiated rates reflect factors other than
price such as experience, previous volumes/market power, anticipated
growth, strategic initiatives, and select concessions.
The Departments do not agree that publication of negotiated rates
for items and services will have negative distortive effects on health
care markets. Rather, the Departments are of the view that the final
rules will help to counteract the recognized price distortions that
result from the unavailability of pricing information to health care
consumers.\140\ As discussed elsewhere in this preamble, the current
unavailability of pricing information for health care items and
services prohibits the health care markets from achieving a meaningful
level of competition based on price because it ensures that health care
consumers typically are not able to include price in their health care
purchasing decisions. The Departments are of the view that making
pricing information available could begin to ameliorate price
distortions in health care by encouraging consumer decision-making that
takes cost into account.
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\140\ Under ideal market conditions, consumers have sufficient
information to make good choices. When consumers do not have
information on price, standard market forces cannot operate, and
prices for health care are distorted resulting in price
discrimination (charging consumers different prices for the same
product) and other problems that currently plague the health care
markets. See generally Mwachofi, Ari, and Assaf F. Al-Assaf.
``Health care market deviations from the ideal market.'' Sultan
Qaboos University Medical Journal vol. 11, 3 (2011): 328-37.
Available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3210041/.
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Another commenter stated that the release of negotiated rates would
inappropriately result in the steering of consumers to particular
providers based on contractual prices. The commenter stated that
informed decision-making is not solely based on price, but is multi-
factorial, involving looking at a provider's clinical expertise,
ability to coordinate care, quality, effectiveness of utilization
management, and guidance from a referring physician. The Departments
agree that informed decision-making is not solely based upon price. The
final rules are only one part of the solution to address issues
contributing to the lack of competition in the health care market and
resulting increases in health care costs. While the Departments address
the problem of price transparency through this rulemaking, other
government and industry stakeholders are working to address other
issues highlighted by commenters, such as the availability of reliable
quality data.
The Departments, in shaping the proposed and final rules,
considered that there is quality data available to individual consumers
and other consumers of health care like employers and government
programs. Various government and industry stakeholders sponsor programs
that aim to provide reliable health care quality information to health
care purchasers. For instance, HHS engages in continual efforts to
develop quality measures that are meaningful and accurately reflect
hospital quality. CMS's Hospital Inpatient Quality Reporting Program
collects quality data from certain hospitals with the goal of driving
quality improvement through measurement and transparency.\141\ CMS
publicly displays this quality data to help consumers make more
informed decisions about their health care.\142\ HHS's Agency for
Healthcare Research and Quality (AHRQ) publishes comparative
information on health plans that include reports sponsored by Federal
and state agencies, private organizations, and purchasing
coalitions.\143\ The Departments appreciate comments received through
the RFI in the proposed rule and are also evaluating future actions to
help ensure quality information is more readily available.
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\141\ See CMS Hospital inpatient Quality Reporting Program web
page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/HospitalRHQDAPU, last
accessed Sep. 21, 2020.
\142\ CMS Hospital Compare website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/HospitalRHQDAPU, last accessed Sept. 21, 2020.
\143\ AHRQ Comparative Reports on Health Plans, https://www.ahrq.gov/talkingquality/resources/comparative-reports/health-plans.html, last accessed Sept. 21, 2020.
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The Departments are also of the view that it is worth noting that
private sector entities have been working to provide useful quality
information to consumers.\144\ For example, the National Quality Forum
(NQF) is a private standard-setting organization focused on the
evaluation and endorsement of standardized performance measurements
that makes available on its website all NQF work products, reports, and
quality measures.\145\ As another example, the Joint Commission is a
not-for-profit organization that develops and applies standards that
focus on patient safety and quality of care.\146\ Finally, the National
Committee for Quality Assurance (NCQA) measures and accredits health
plans as well as the quality of medical providers and practices. For
example, more than 191 million people are enrolled in health plans that
report quality results using NCQA's Healthcare Effectiveness Data and
Information Set (HEDIS),\147\ which includes more than 90 measures
across six ``domains of care,'' including effectiveness of care,
access/availability of care, and experience of care.\148\
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\144\ See, for example, Ranard, B.L., Werner, R.M.,
Antanavicius, T., Schwartz, H.A., Smith, R.J., Meisel, Z.F., Asch,
D.A., Ungar, L.H., & Merchant, R.M. (2016). ``Yelp Reviews Of
Hospital Care Can Supplement And Inform Traditional Surveys Of The
Patient Experience Of Care. Health Affairs'' (Project Hope), 35(4),
697-705. Available at: https://doi.org/10.1377/hlthaff.2015.1030
(``Online consumer-review platforms such as Yelp can supplement
information provided by more traditional patient experience surveys
and contribute to our understanding and assessment of hospital
quality.'').
\145\ See the National Quality Forum website, http://www.qualityforum.org/how_we_do_it.aspx, last accessed Oct. 8, 2020.
\146\ See The Joint Commission website, https://www.jointcommission.org/about-us/facts-about-the-joint-commission/joint-commission-faqs/, last accessed Oct. 8, 2020.
\147\ See NCQA website, https://www.ncqa.org/hedis/, last
accessed Oct. 8, 2020.
\148\ Id.
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Once pricing data is available through the final rules, existing
quality data can be considered with pricing data to produce a more
complete and accurate picture of total value. The same third-party
developers who will have access to the information published pursuant
to these final rules could develop platforms capable of presenting
available quality data alongside pricing information. The Departments,
therefore, anticipate that making health care prices transparent may
spur consumers to seek and consider available quality and price
information to determine whether a particular item or service is worth
a higher or lower price. There is evidence from retail sector studies
showing that consumers want high-quality, low-priced goods and will
seek the lower price among
[[Page 72214]]
products of the same quality.\149\ Given the high cost of health care,
the Departments are of the view that the same trend toward seeking
lower prices will more likely than not hold true in the health care
market when prices become transparent.\150\
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\149\ Shirai, M. ``Impact of `High Quality, Low Price' Appeal on
Consumer Evaluations.'' Journal of Promotion Management. December
2015. Available at https://www.tandfonline.com/doi/full/10.1080/10496491.2015.1088922.
\150\ Recent research evaluating the impact of New Hampshire's
price transparency efforts shows that providing insured patients
with information about prices can have an impact on the out-of-
pocket costs consumers pay for medical imaging procedures, not only
by helping users of New Hampshire's website choose lower cost
options, but also by leading to lower prices that benefited all
patients, including consumers in New Hampshire that did not use the
website. See Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' The Review of Economics and Statistics. Volume. 101.
No. 4. Available at: https://www.mitpressjournals.org/doi/full/10.1162/rest_a_00765; see also Brown, Z.Y. ``An Empirical Model of
Price Transparency and Markups in Health Care.'' August 2019.
Available at: http://www-personal.umich.edu/~zachb/
zbrown_empirical_model_price_transparency.pdf.
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The Departments received many comments stating that publishing
negotiated rates is unlikely to meet the Departments' goal of helping
consumers understand their health coverage and reasonably predict their
out-of-pocket costs. Many of these commenters stated that negotiated
rates information would not provide consumers with meaningful,
actionable pricing information, and could possibly make purchasing
decisions more confusing and difficult for consumers. One commenter
noted that the public disclosure of negotiated rate information could
distract from relevant participant, beneficiary, or enrollee-specific
cost-sharing information such as accumulated amounts. One commenter
stated that confusing and unhelpful pricing information would erode
consumer trust and present long-term challenges for the health care
system.
The Departments disagree that public knowledge of the price of
health care items and services will increase individual consumers'
confusion regarding health coverage or distract them from other
information relevant to their out-of-pocket costs, such as the status
of their accumulated amounts and note that commenters who raised this
point cited no empirical or anecdotal evidence supporting these
concerns. On the contrary, as explained throughout this preamble, the
Departments are of the view that standard economic theory, experience
from several states, and evidence from other markets demonstrate that
increased transparency leads to better-informed purchasing decisions,
generally lower prices, and quality improvements. Moreover, the
Departments expect that third-party developers will compete to make
pricing information available to the public in formats that are user-
friendly, so disclosure of detailed pricing information is unlikely to
lead to significant consumer confusion.
As noted earlier in this preamble, the Departments expect the
public disclosure of pricing information related to health care items
and services to help both uninsured and insured individuals in their
health care and health coverage purchasing decisions. Furthermore,
research suggests that having access to pricing information can
increase consumers overall satisfaction and provide opportunities for
education and engagement on health care pricing.\151\ For instance,
when the Children's Hospital of Philadelphia incorporated a Patient
Cost Estimate Department, they found that cost estimates resulted in
``fewer billing-related complaints, decreased revenue losses, and
increased overall patient satisfaction.'' \152\ A targeted study in the
American Surgeon journal found five out of six medical centers that
adopted price transparency reported increases in patient satisfaction
and patient engagement after price transparency.\153\
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\151\ Revere, F.L., et al. ``A consumer-based evaluation of
Healthcare Price and Quality Transparency.'' Journal of Health Care
Finance. Summer 2016. Available at: http://www.healthfinancejournal.com/index.php/johcf/article/download/72/74.
\152\ Otero, H., et al. ``The Cost-Estimation Department: A Step
Toward Cost Transparency in Radiation.'' Journal of the American
College of Radiology. Vol 16. Issue 2. February 2019. Available at:
https://doi.org/10.1016/j.jacr.2018.07.033.
\153\ Mehta, A., et al. ``The Impact of Price Transparency for
Surgical Services.'' The American Surgeon. April 2018. Available at:
https://pubmed.ncbi.nlm.nih.gov/29712614/.
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One commenter stated that public disclosure of pricing information
through the machine-readable files is unlikely to benefit uninsured
consumers, in particular, as it will be difficult for them to make the
necessary comparisons or negotiate with providers as providers are not
incentivized to negotiate with uninsured consumers. Another commenter
stated that the machine-readable files would not be very helpful for
current beneficiaries, participants, or enrollees, but acknowledged
they could benefit uninsured individuals and enrollees considering
alternative coverage.
By contrast, other commenters, including many individual
commenters, stated that access to negotiated rate information would
empower both insured and uninsured consumers by helping to correct the
lack of consumer choice and information and help support efforts by
other market actors. In particular, one commenter stated that consumers
would likely use the pricing information, especially if their cost-
sharing liability is in the form of coinsurance that is tied to the
negotiated rates. One commenter stated that release of information on
negotiated rates would help consumers by spurring innovation by third-
party application developers to create tools to help consumers and
payers, especially self-insured group health plans. Finally, one
commenter did not support the requirements for public disclosure of in-
network provider rates but did acknowledge that public disclosure of
de-identified aggregated data for both in-network and out-of-network
providers could empower consumer decision-making.
The Departments agree that transparency would help provide more
consumer information and support consumer choice for both insured and
uninsured consumers. The Departments continue to be of the view that
market actors, including IT developers, researchers, industry experts,
and plans and issuers would be incentivized to innovate in the price
transparency and health care consumerism space once access to the
pricing information required to be disclosed through the final rules
becomes available. In the proposed rule, the Departments emphasized
that individual consumers need easy to use tools and resources to help
them better understand their current health care coverage, health
coverage they consider purchasing, and their out-of-pocket exposure
under those plans. Health care stakeholders and other industry
participants, including web and mobile application developers, are
already attempting to meet this need, despite the incomplete pricing
information available to them. Given actionable data that can improve
such tools and resources, industry actors will likely be incentivized
to design innovations to deliver the help and information consumers
need to make informed health care decisions based, at least in part, on
the important factor of price. The final rules will support current and
future efforts to help guide consumers to the lowest cost items and
services that meet their specific needs and qualifications. To spur
this innovation, the pricing information must allow for meaningful
evaluation of different options for delivering health care items or
services, coverage options, and provider options. One of the main
avenues through which
[[Page 72215]]
the Departments assumed this innovation would materialize is through IT
developers who could be incentivized to design and make available
internet-based tools and mobile applications that could guide consumers
in accessing available price information; as well as researchers who
would have the ability to analyze health care pricing at local and
national levels and provide the public with their findings. Industry
experts and plans and issuers would also have the ability to use
pricing information to develop innovative plan benefit designs that
could result increased competition and cost savings. Based on comments
received from interested IT developers and other innovators, the
Departments continue to believe many innovators are interested in
utilizing this pricing information, once available, to spur innovation
in the health care space, as intended. The Departments expect internet-
based tools and mobile applications will increase the likelihood that
both insured and uninsured consumers will be able to use the
information to make informed health care purchasing decisions. And, as
stated by a commenter, the information required to be made public
through the proposed rules would help reduce wasteful spending because
it would support efforts by employers, state regulators, and other
purchases of health care to evaluate prices and identify unwarranted
spending variation. Therefore, the Departments did not intend or expect
that behavioral changes emanating from public disclosure of this
information will be limited to consumers but will benefit a variety of
stakeholders.
The goals the Departments seek to achieve through these
requirements for public disclosure are not mutually exclusive. The
Departments expressed a desire to bring about an outcome where
innovators, including researchers, would enter or expand in the health
care purchasing space to develop tools, applications, and public
information that would support consumer decision-making. Thus, the
Departments disagree with commenters who argued that public disclosure
of negotiated rates would not support consumer decision-making.
The Departments disagree with commenters who suggested that pricing
information presented through the public disclosures would be confusing
and misleading to consumers and could erode consumer trust and present
long-term challenges for the health care system. Based on the review of
the over 25,000 comments received on the proposed rules, the vast
majority of which were submitted by individuals, consumer trust in the
health care system is already quite low, due in substantial part to the
opacity of health care pricing.\154\ In one study of a nationally
representative sample, researchers found that participants often
believed that providers and issuers set prices that do not reflect
either the quality or the cost of goods and services, contributing to
the study's conclusion that most Americans do not perceive the price
and quality of health care to be associated. Study participants
described prices as both too high and irrational, noting that prices
varied within their regions for unknown reasons.\155\ The Departments'
transparency efforts are meant to increase transparency of health care
pricing information. The Departments do not agree that this information
would further frustrate consumers compared to the status quo, even if
it is difficult to navigate for the average consumer without the use of
internet-based tools or applications.
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\154\ See, for example, Phillips, K.A., Schleifer, D., and
Hagelskamp, C. ``Most Americans Do Not Believe That There Is An
Association Between Health Care Prices And Quality Of Care.'' Health
Affairs. 2016. Available at https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2015.1334.
\155\ Id.
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One commenter stated that disclosure of negotiated rates could harm
the ability of health issuers to reward high performing providers with
higher reimbursements. Additionally, some commenters noted that focus
on price could particularly harm small health plans and TPAs who may
have been able to negotiate discounted rates by offering health plans
in a limited service area.
The Departments understand that requiring release of this pricing
information may impact commercial arrangements and result in certain
one-time and ongoing administrative costs, which could
disproportionately affect small group plans, TPAs, and issuers offering
coverage in the small group market. However, the Departments view
making this information available to consumers and the public as
beneficial to the public's long-term interests in facilitating a
consumer-oriented, information-driven, and more competitive market. In
addition, as discussed below, the Departments are establishing several
special rules for streamlining the provision of public disclosures
required through the final rules. These special rules will help
mitigate the concerns of small group plans and issuers by allowing them
to leverage a contractual relationship through an issuer or
clearinghouse to satisfy the public disclosure requirements of the
final rules.
Several commenters submitted feedback on how disclosures in the
proposed rules could affect contractual arrangements. One commenter
expressed the view that the requirement to release negotiated rates
threatens contracts negotiated between two private entities. Several
commenters submitted comments related to gag clauses or non-disclosure
agreements contained in provider contracts as well as other contract
terms that are often included in contracts between providers and payers
(such as anti-steering and anti-tiering provisions) that may limit the
ability of third parties to use the data. Gag clauses, which also may
be referred to as non-disclosure agreements, are terms that are often
included in provider-payer contracts, which prohibit one or both
parties from making public the negotiated rates therein.\156\ Anti-
steering and anti-tiering provisions are terms that may be included in
provider-payer contracts (usually between issuers and hospital
systems), which prohibit the plan or issuer from directing
participants, beneficiaries, or enrollees toward higher-quality or
lower-cost providers, and require that all providers associated with
the contracting provider (for example, for a hospital system this could
include hospitals, other affiliated facilities, and physicians) to be
placed in the most favorable tier of providers.\157\
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\156\ ``Provider Contracts.'' The Source on Healthcare & Price
Competition, UC Hastings College of Law. Available at: https://sourceonhealthcare.org/provider-contracts/.
\157\ Id.
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One commenter stated that if the Departments do not fully address
the implications of non-disclosure agreements in provider and payer
contracts, legal complications could arise from payers attempting to
meet the requirements to disclose negotiated rates and violating these
agreements in the process. Another commenter strongly supported
revisions to the proposed rules to address the barriers associated with
gag clauses. To address this issue, another commenter recommended the
Departments provide that the final rules supersede any provider
contract gag clause to the extent the final rules conflict with current
or future contractual language.
The Departments understand that this requirement may require
alterations to some existing contracts. For example, payers and
providers may need to remove contract terms that conflict with the
requirement to disclose negotiated
[[Page 72216]]
rates such as gag clauses or non-disclosure agreements.\158\ It is not
uncommon for new or modified regulatory requirements or new statutory
provisions to alter private contractual arrangements such as those
between a health insurance payer and health care provider. Because
changes in law or statute that may need to be reflected in payer-
provider contracts is not uncommon, the Departments expect that
providers and payers have processes in place address to these
requirements of the final rules. Often, the possibility that that new
or modified regulatory requirements or new statutory provisions could
alter such contracts is contemplated by the contracts themselves; for
example, drafters may include contract language that indicates terms
may be altered by changes in law or regulation. Such language would
obviate the need for updates outsides of the regular contracting
schedule.
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\158\ The Departments note that gag clauses that would prohibit
a pharmacy from informing a participant, beneficiary, or enrollee of
any differential between that individual's out-of-pocket cost under
the coverage option offered by his or her plan or issuer regarding
acquisition of the drug and the amount that individual would pay
without using any health plan or health coverage are already
prohibited. See Sec. 2729 of the PHS Act.
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As a general matter, the onus for ensuring a contract provision
does not violate applicable law rests with the parties to the contract.
Nothing in the final rules prevents providers and payers from
implementing contract revisions to ensure terms are not in conflict
with the requirements of the final rules. Because the Departments are
of the view that prescription or prohibition of specific contract terms
or language in payer-provider contracting is not necessary, the
Departments leave it to plans, issuers, and providers to avoid contract
terms that would prohibit or frustrate either party's compliance with
the final rules.
Many commenters who did not support the requirements for public
disclosure of in-network provider rates and out-of-network allowed
amounts requested that the Departments withdraw the proposed rules or
otherwise work with stakeholders to develop policy solutions that meet
consumer needs with less burden and guard against potential unintended
consequences. Some commenters suggested the Departments collect more
data about the potential impacts of public disclosure of negotiated
rates to ensure the policy is modified, if needed, to protect against
the risk of unintended consequences, noted earlier. One commenter
suggested the Departments pilot the requirement for public disclosure
of negotiated rates. Another commenter recommended the Departments
pilot the release of negotiated rates in a state where there are a few
small carriers to gain a clearer understanding of potential
consequences of the public disclosure requirements. Another commenter
recommended the Departments pilot full price transparency in several
markets and conduct longitudinal studies on the impacts.
Some commenters suggested the Departments refocus transparency
efforts to already existing solutions or different initiatives. Some
commenters recommended that the final rules require plans and issuers
to send claims data to the HCCI to ensure that health care cost data
reaches the public domain through researchers without disclosing
confidential information or distorting the market. A few commenters
suggested the Departments leverage existing data sources such as all-
payer claims databases to promote transparency goals. One commenter
stated the Administration should support congressional and states'
efforts to pursue and expand upon transparency efforts, including
through all-payer claims databases.
The Departments appreciate both private and public transparency
efforts already underway. In the development of the proposed and final
rules, the Departments sought feedback from industry and other
stakeholders. While the Departments agree that expanding data sent to
HCCI will help researchers gain a better understanding of market
dynamics, the Departments are of the view that health care pricing data
should be coupled with plan and issuer information. If the information
were to be decoupled, as through HCCI or in an all-payer claims
database, it would not provide the degree of transparency in prices
needed to effectuate the objectives the Departments seek to achieve
through the final rules. For example, pricing data, decoupled from plan
and issuer data, would not provide actionable information to consumers
that seek to evaluate health coverage options, as they would not be
able to connect pricing to specific plans.
The Departments view the disclosure requirements set forth in the
final rules as complementary to and supportive of state-level efforts.
States act as incubators for transparency efforts. Nothing in the final
rules precludes states from continuing to establish and run state-level
transparency efforts. Indeed, the Departments intend for state
regulators to be able to use the disclosures required to be made public
through the machine-readable files to support their oversight of health
insurance markets, including supporting their own state-level
transparency efforts such as all-payer claims databases. However, the
Departments are also aware that there are limits to the pricing
information that states can obtain through state-level transparency
efforts. For instance, states are not able to obtain pricing
information from self-insured group health plans; the final rules will
help states obtain this information.
The Departments further maintain that the final rules are
significantly more likely to achieve positive results for consumers and
health care markets than they are likely to result in the potential
negative consequences outlined by certain commenters. The Departments
are of the view that traditional market forces that affect prices in
any market, including competition between providers; the threat of new
market entrants that offer quality, lower cost services; and the
increased bargaining power of consumers will be supported by the final
rules. The Departments also are of the view that providers who choose
to arbitrarily or unreasonably increase their prices based on publicly-
available negotiated rate data are more likely to damage their own
competitive positions and reputation than they are to cause widespread
health care cost increases in their particular markets. For these
reasons, the Departments remain confident that the final rules'
requirements for disclosure of negotiated rate information will benefit
health care consumers by giving them information necessary to
effectively shop for and choose the health care coverage and providers
that fit their needs and budgets. As consumers make more informed
choices, based on available price data, market forces will have a
chance to operate and potentially correct the current course of
unsustainable increases in health care costs.
In light of the Departments' commitment to health care price
transparency and the importance of addressing the distortive effects of
the absence of pricing information, the Departments are not convinced
there is a need to change the policies in the final rules to mitigate
the risk of unintended consequences or violations of law such as price
fixing and collusion among providers. As discussed elsewhere in this
preamble, research, academic literature, and the experience of various
state efforts have provided support for the Departments' conclusion
that the public availability of in-network rate
[[Page 72217]]
information is substantially more likely than not to lead to more
informed health care choices, increased competition, and lower prices.
The Departments note that price transparency is not a novel
concept, even in health care pricing. Several states, including New
Hampshire and Maine, have implemented state-level price transparency
efforts. While the Departments acknowledge that these state efforts
differ in material ways from the disclosure requirements of the final
rules, the same underlying principle of price transparency that
undergirds state efforts also undergirds the final rules. These state
efforts provide evidence that transparency at a more localized
geographic level does not result in the extreme unintended consequences
postulated by some commenters. The Departments acknowledge that other
national health policy initiatives are sometimes tested through pilots;
however, the Departments are of the view that such an approach is not
necessary for price transparency, in part, because there is already
evidence through state initiatives that price transparency is
achievable.
The proposed and final rules reflect the Departments' conclusion
that an expansive implementation of these requirements will be the most
effective manner in which to reasonably ensure that the impact will be
spread across all markets, rather than isolated to particular
geographic areas, markets, or groups of consumers. The goal of the
final rules is to expand access to price transparency information among
the public, which will not be realized without an expansive
implementation. The Departments are concerned that if pricing
information for group health plans and insurance in the individual and
group markets is not made available to the public or is made public in
a piecemeal fashion, there will be little incentive for health care
researchers, third-party application developers, or other industry
actors to invest scarce resources into a tool that will only offer
regional or otherwise limited pricing data. Other stakeholders, such as
researchers and regulators, would also find incomplete pricing
information less useful to their efforts to better understand, better
oversee, and develop innovations in the health care markets. Finally,
the Departments are concerned that limiting the implementation of this
rule, by scope or by geographic market area, will limit the impact for
the millions of consumers (both individuals and employers) who are
expected to benefit from the public disclosures required through the
final rules. Consumers located in a geographic market where data would
not be made available under a more limited requirement would not
experience any benefit from the availability of actionable pricing
information in other markets. Even those consumers located in
geographic markets where pricing information would be made available
under a more limited requirement would likely experience more limited
benefits than with a market-wide requirement to release pricing
information because these consumers would likely not have access to
tools developed by third-party application developers. These consumers
would also be less likely to experience downstream benefits from
contributions expected from other stakeholders, such as researchers and
regulators.
In addition to establishing a preference for establishing market-
wide rules, in the preamble to the proposed rules, the Departments
explained the importance of timely action to increase
transparency.\159\ The Departments observed that continuously rising
health care costs and increases in out-of-pocket liability, without
transparent, meaningful information about health care pricing, have
left consumers poorly equipped to make cost-conscious decisions when
purchasing health care items and services. In addition, consumers
across all markets should come to expect and receive the same access to
standardized pricing information and estimates. This broader
applicability also has the greatest potential to reform health care
markets. The Departments recognized the need for a faster and nimbler
approach to addressing the pressing issue of rising health care prices.
For these reasons, the Departments are of the view that a pilot
approach in a specific geographic area or an otherwise phased-in
approach for the requirement to publicly disclose negotiated rates
through the machine-readable files would not be sufficient to meet the
requirement for transparency in coverage.
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\159\ 84 FR 65464, 65465 (Nov. 27, 2019).
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Because the Departments have determined a need for an expansive
implementation of transparency in coverage requirements, and for the
reasons discussed at length in response to public comments, the final
rules adopt the requirement to publicly disclose negotiated rates for
all group health plans and individual and group market issuers,
regardless of geographic market.
Scope of Pricing Information To Be Made Publicly Available
Several commenters explicitly supported public disclosure of
negotiated rates and out-of-network allowed amounts for all items and
services. However, other commenters recommended the Departments limit
the items and services to only the most common items and services or a
narrow set of shoppable services in order to make the machine-readable
files more meaningful to consumers. Another commenter did not support
the negotiated rate disclosure proposals, but acknowledged that
disclosure of rates for a subset of shoppable services would be
manageable, could allow issuers to account for innovative payment
arrangements, and could be used to gather empirical evidence on the
impact of transparency on the health care markets.
The Departments understand that requiring plans and issuers to
include all items and services in the machine-readable files could
produce large data sets that could be cumbersome and may be costlier to
maintain than a more limited file of shoppable services. However, the
Departments are of the view that release of this information for all
items and services, as proposed, is crucial for advancing the key
objectives of the final rules to spur innovation, increase competition,
and empower consumer activities in the health insurance markets. The
Departments are of the view that limiting the data in the machine-
readable files would undermine efforts to achieve these objectives. In
particular, the Departments are concerned that if the requirement were
to be modified to apply to only a shoppable subset of items and
services, then third-party application developers may not be as
interested in innovating in this area.
Furthermore, the Departments are of the view that efficiencies will
be gained after initial development of these files. Although the
initial implementation burden for some plans and issuers may be
sizeable, future releases of data could be automated, greatly reducing
the burden in subsequent years.
One commenter stated the type of data being required to be
disclosed is prohibited from disclosure by CMS for laboratory services
under section 1834A of the SSA, which requires CMS to keep confidential
payer rates reported by applicable laboratories. The commenter stated
section 1834A of the SSA should also apply to disclosure of similar
information by health plans.
Section 1834A of the SSA is applicable to reporting of private
sector
[[Page 72218]]
payment rates for the limited purpose of establishing Medicare
reimbursement rates for laboratory services. Section 1834A protects the
confidentiality of information disclosed to HHS by a laboratory and
prohibits the Secretary of HHS or a Medicare contractor from disclosing
the information in a manner that identifies the particular payer or
laboratory, identifies the prices charged, or identifies the payments
made to any such laboratory notwithstanding any other provision of law.
The confidentiality protections of the data required to be disclosed to
HHS under section 1834A protects laboratories and payers from re-
disclosure by HHS and Medicare contracts. These protections are not
applicable to the public disclosures required under the final rules.
First, the final rules require plans and issuers to publicly disclose
in-network providers' negotiated rates and out-of-network providers'
allowed amounts for all covered items and services. These disclosures
must be made through machine-readable files posted in a public location
on a plan or issuer's website. HHS or contractors of HHS will have no
active role in publicizing the information required to be public
through the final rules. Second, the confidentiality requirements in
section 1834A are applicable ``notwithstanding any other provision of
law.'' The public disclosure requirements in the final rules are being
finalized through an exercise of specific authority under section
1311(e)(3)(A)(vii) and (ix) of PPACA (as applied to plans and issuers
in the individual and group markets through section 2715A of the PHS
Act). Even if the public disclosures were to be subject to section
1834A of the SSA, the confidentiality provision of section 1834A would
not be applicable because the public disclosure requirements
established under the final rules are required by an exercise of
authority under a separate provision of law. For these reasons, and
because laboratory services fall within the scope of all covered items
and services, the final rules clarify that disclosure by plans and
issuers of pricing information for laboratory services is required
under the final rules.
As discussed earlier in this preamble, the Departments are
modifying the proposed requirements relating to inclusion of all items
and services in the internet-based self-service tool. For the internet-
based self-service tool, 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2,
and 45 CFR 147.211 adopt a phased-in approach under which plans and
issuers are required to include only include a subset of items and
services during the initial year of implementation. However, plans and
issuers will still eventually be required to include all covered items
and services in their internet-based self-service tools in order to
meet the requirements of the final rules. The Departments are of the
view that a similar phased-in approach for the machine-readable files
is not necessary and would not support the achievement of the goals of
the final rules.
For these reasons, the final rules adopt, as proposed, the
requirement to include all covered items and services, including
prescription drugs, in the public disclosures required to be made
through the machine-readable files.
One commenter made the point that in order to provide meaningful
transparency to consumers, as well as to address the issues of
inconsistent pricing among hospitals in particular, the Departments
should require public disclosure of data related to pricing in addition
to the negotiated rate. The commenter stated the data elements should
include the following: Number of procedures performed by the provider
in the reported period, number of bed days, total billed charges in the
reporting period, total amount received/paid for services in the
reporting period, mean billed charged amount, mean accepted amount,
median billed charged amount, mean accepted amount, median billed
charged amount, median accepted payment, minimum billed charged amount,
maximum billed charged amount, minimum accepted payment, and maximum
accepted payment.
A goal of the final rules is to provide transparency for all
covered health care items and services. To this end, the final rules'
public disclosures are tailored to require only certain critical
pricing information that the Departments view as most likely to achieve
this goal, while minimizing the burdens for plans and issuers of
producing and maintaining the information. Requiring additional data
elements, such as those listed by the commenter, would introduce an
increased level of complexity to the machine-readable files and
increase the burden of making the public disclosures.
Additionally, the Departments are of the view that it would be
unnecessarily burdensome to isolate hospital pricing information for
additional disclosure when hospitals already have separate price
transparency disclosure obligations. As discussed elsewhere in this
preamble, the Hospital Price Transparency final rule requires hospitals
to make public their standard charges for items or services they
provide.\160\ The Hospital Price Transparency final rule requires
disclosure of five types of standard charges:
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\160\ 84 FR 65524 (Nov. 27, 2019).
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The gross charge (the charge for an individual item or
service that is reflected on a hospital's chargemaster absent any
discounts);
the discounted cash price (the charge that applies to an
individual who pays cash, or cash equivalent, for a hospital item or
service);
the payer-specific negotiated charge (the charge that a
hospital has negotiated with a third-party payer for an item or
service);
the de-identified minimum negotiated charge (the lowest
charge that a hospital has negotiated with all third-party payers for
an item or service); and
the de-identified maximum negotiated charge (the highest
charge that a hospital has negotiated with all third-party payers for
an item or service).
The Departments are of the view that the public disclosure
requirements for hospitals under the Hospital Price Transparency final
rule, in combination with the public disclosure requirements of the
final rules, will address the concern raised by one commenter regarding
inconsistent pricing among hospitals. The disclosure required for
hospitals under the Hospital Price Transparency final rule will help
provide local and more specific pricing information through the
availability of information on five types of standard charges, but the
information will only be made publicly available for the items and
services that hospitals provide. The final rules supplement this
information by providing information related to negotiated rates or
derived amounts and allowed amounts for all covered items and services.
Thus, the final rules will provide a window into pricing for all items
and services, while the Hospital Price Transparency final rule requires
disclosure of more specific pricing information for the items and
services provided by hospitals. Finally, the final rules also
supplement the Hospital Price Transparency final rule because the final
rules make the information for all contracted network hospitals
available from one plan or issuer in a single, centralized file.
Therefore, the final rules permit consumers--especially when using
third-party web-based tools--to more readily compare hospital rates
within and across plans and issuers.
Several commenters expressed concerns about participant,
beneficiary,
[[Page 72219]]
and enrollee privacy related to the proposed disclosures of negotiated
rates and allowed amounts. Some commenters expressed concerns about how
third-party developers or other downstream entities would use and
protect participant, beneficiary, and enrollee data. They noted that
even though the Departments' disclosure requirements do not include
PHI, patients could be enticed to share personal data with third-party
developers and other secondary entities who could potentially use the
information to re-identify consumers. Some commenters stated that
parties not subject to HIPAA could seek to commercialize consumers'
information. One commenter suggested the Departments look to HCCI as an
example of how de-identified data can advance the goals of
transparency, which could mitigate concerns about proprietary
information while maintaining meaningful, granular information that
illuminates price variation in the health care system.
One commenter stated that the Departments should consider the
proposed rules in the context of other HHS rules related to the
interoperability of data and delay the implementation of all such rules
until HHS develops consumer privacy and protection requirements for
third-party applications developed by non-HIPAA-covered entities.
Another commenter recommended that, if the rules are finalized without
additional privacy protections, the Departments should conduct an
educational campaign to inform consumers of the consequences of
providing information to third-party application developers. A
commenter also expressed national security concerns regarding the
machine-readable files, noting that the health status of Americans is a
valuable commodity for foreign intelligence services.
The Departments acknowledge commenters' concerns about third-party
application developers and other entities gaining access to personally
identifiable information (PII) and PHI through consumer use of online
applications. The Departments further acknowledge comments that
consumers may not always fully understand how their information,
including sensitive medical information, will be used or stored by such
third parties. However, the Departments also acknowledge that consumers
have a right to access, use, and share their own health information,
both generally and under HIPAA. The Departments are also of the view
that there is ample evidence that consumers require help to understand
their health coverage, their out-of-pocket costs for health care items
and services, and how their health care choices affect the overall
costs of their health coverage and health care items and services.\161\
The final rules will allow access to data, supplementary resources, and
other assistance consumers need to make informed choices by fostering
innovation and offering access to tools that consumers may use to make
informed health care choices.
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\161\ Arora, V., Moriates, C., and Shah, N. ``The Challenge of
Understanding Health Care Costs and Charges.'' The American Medical
Association Journal of Ethics. November 2015. Available at: https://journalofethics.ama-assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11.
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The Departments likewise considered evidence of significant
consumer reliance on the internet for all kinds of information, but
especially for health information. In a study conducted by the Pew
internet & American Life Project and published in July 2003,
researchers found that 80 percent of internet users, or about 93
million Americans, have searched for a health-related topic online, a
62 percent increase since 2001.\162\ Popular search topics included
health insurance (25 percent); a particular doctor or hospital (21
percent); and alternative treatments (28 percent).\163\ By 2013, the
number of Americans searching for health information online had nearly
doubled from 2003, to about 182 million people.\164\ A 2018 study found
a significant correlation between the use of online resources to obtain
health information and the decisions consumers take concerning health
care services.\165\
---------------------------------------------------------------------------
\162\ ``Health Searches and email Have Become More Commonplace,
But There is Room for Improvement in Searches and overall internet
access.'' internet Health Resources. Pew Research Center. July 16,
2003. Available at: https://www.pewresearch.org/internet/2003/07/16/internet-health-resources/.
\163\ Id.
\164\ Fox, S., and Duggan, M. ``Health Online 2013.'' Pew
Research Center. January 15, 2013. Available at: https://www.pewresearch.org/internet/2013/01/15/health-online-2013/.
\165\ Chen, Y. et al. ``Health Information Obtained From the
internet and Changes in Medical Decision Making: Questionnaire
Development and Cross-Sectional Survey.'' Journal of Medical
internet Research. Volume 20. No. 2. February 2017. Available at:
https://www.jmir.org/2018/2/e47/pdf.
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The Departments are of the view that many American consumers have
some experience with dealing with the disclosure of sensitive health
information on the internet \166\ and that consumer reliance on the
internet for health care information will only increase despite
inherent privacy risks. The Departments considered that websites and
internet applications that collect consumer information provide
information through privacy policies and terms of service that are
available to users of how their information may be used and shared.
Federal laws and enforcement mechanisms are in place to help protect
consumers from unfair and deceptive practices, including deceptive data
collection and the sale of data collected without adequate consumer
notice.\167\ Given existing measures to protect consumer privacy on the
internet, the Departments are of the view that common internet privacy
risks should not operate to deprive consumers of the information,
tools, and support they need to make informed choices related to health
care coverage, providers, items, and services.
---------------------------------------------------------------------------
\166\ Zhu, P., Shen, J., and Xu, M. ``Patients' Willingness to
Share Information in Online Patient Communities'' Questionnaire
Study.'' Journal of Medical internet Research. Volume 22. No. 4.
April 2020. Available at: https://pubmed.ncbi.nlm.nih.gov/32234698/.
\167\ ``Privacy & Data Security Update: 2019.'' United States
Federal Trade Commission. Available online at: https://www.ftc.gov/system/files/documents/reports/privacy-data-security-update-2019/2019-privacy-data-security-report-508.pdf; see also ``Privacy and
Security Enforcement.'' United States Federal Trade Commission.
Available at: https://www.ftc.gov/news-events/media-resources/protecting-consumer-privacy/privacy-security-enforcement (``the FTC
can and does take law enforcement action to make sure that companies
live up to [the] promises'' regarding how consumer information will
be safeguarded); see also Complaint in United States v. Facebook,
Case No. 19-cv-2184, U.S. District Court for the District of
Columbia. Available at: https://www.ftc.gov/system/files/documents/cases/182_3109_facebook_complaint_filed_7-24-19.pdf (FTC complaint
leading to a historic $5 billion fine for, among other things,
deceptive practices in violation of section 5(a) of the FTC Act
where the social media company failed to effectively disclose that
consumer information would also be used for advertising). The
referenced fine can be found at: https://www.ftc.gov/news-events/press-releases/2019/07/ftc-imposes-5-billion-penalty-sweeping-new-privacy-restrictions, last accessed Sep. 11, 2020 (press release
announcing fine).
---------------------------------------------------------------------------
Even though the Departments are not persuaded that privacy risks
common to the use of internet applications outweigh the benefits of the
disclosures under these the final rules or the general need for price
transparency, ensuring the privacy and security of consumer PII and PHI
is a top priority for the Departments. The Departments will work with
plans and issuers to provide information they can use to educate
participants, beneficiaries, and enrollees about sharing their health
information with third party applications. This will include
information on about the roles of Federal agencies such as the Office
for Civil Rights (OCR), the FTC, and ONC, which already focus on
ensuring that consumer privacy rights and interests are appropriately
protected. The Departments will encourage plans
[[Page 72220]]
and issuers to share this information with their participants,
beneficiaries, and enrollees who might elect to share health
information with third-party applications.
In finalizing the rules, the Departments considered the large
number of consumers who have decided to share personal information
because they have determined that the benefits offered by an internet
website or mobile application outweigh potential risks to their
privacy. The Departments are of the view that consumers will be able to
make similar determinations with regard to applications that make use
of data to be disclosed through the machine-readable files required by
the final rules.
As discussed earlier in the preamble to the final rules, the
Departments also are not persuaded by the argument that the disclosures
required under the final rules, or disclosures consumers may make to
applications that leverage the data required, could introduce national
security concerns. First, the information the Departments are requiring
to be disclosed through the machine-readable files does not include PHI
or PII. Additionally, as discussed in more detail later in this
preamble, in an effort to ensure that the disclosures balance price
transparency with the need to protect privacy, the Departments have
modified the proposed rules to increase the minimum disclosure
threshold from 10 to 20 unique payment amounts, where any historical
payment amounts connected to less than 20 claims for payment would be
omitted from the machine-readable file containing out-of-network
allowed amounts and historical billed charges (the Allowed Amount
File). The increase will further limit the possibility that individual
participants, beneficiaries, and enrollees may be identified through
historical allowed amount data. Second, the information a consumer
could share with applications incorporating data required to be
disclosed through the final rules is not significantly different from
data consumers already actively share through similar applications.
Therefore, the Departments are not convinced there are unique national
security concerns flowing from the disclosures required by the final
rules.
One commenter was concerned about allowing third parties to use
plan and issuer information to provide cost and pricing information to
consumers without those third parties being obligated to provide
accurate and relevant information to consumers. The accuracy of third-
party internet-based tools and applications will be important to
achieving the goals of transparency in coverage. However, the cost and
pricing information included in third-party internet-based tools, and
tools developed by other secondary entities, would only be as accurate
as the public disclosures made by plans and issuers. Therefore, the
Departments are of the view that it is in the best interest of plans
and issuers to ensure data accuracy through a robust quality assurance
process if they have concerns about the accuracy of cost and pricing
information being provided to consumers through third-party internet-
based tools. Furthermore, nothing in the final rules prohibits plans
and issuers from including comprehensive data dictionaries and other
supplementary documentation along with the machine-readable files.
Plans and issuers are also free to provide plan-specific disclaimers or
clarifications regarding the information they are required to produce.
Finally, the Departments expect that consumers, plans, issuers, and
other health care stakeholders will monitor third-party internet-based
tools for accuracy and will and report concerns to the developer, the
public, and appropriate state and Federal agencies, including the
Departments, for evaluation and potential action.
The Departments further expect that market forces will act to weed
out applications that do not provide reliable information. Consumers
who use a third-party application or other online tools for health care
decision support and later conclude that the tool misled or misinformed
them will, at minimum, cease use of the tool. Such consumers are also
likely to rate the application poorly or leave unfavorable reviews,
reducing the likelihood that other consumers who see the rating or
review will rely on the tool. Over time, consumers and other
stakeholders may collectively identify the most accurate and highest
quality tools, while reducing use of less accurate, unreliable tools.
The Departments also expect that third-party tools will inform users of
limitations on the accuracy of their information and will present
relevant disclaimers informing consumers that any estimates of out-of-
pocket liability are not guarantees regarding consumer liability for
services. Tool users also will have the opportunity to evaluate and
could attempt to confirm any cost estimates provided by online tools by
contacting the plan, issuer, or health care provider they ultimately
choose based on information provided by the tool. Such measures will
address the risk that consumers will be led to unreasonably rely on any
cost estimate provided by a third-party tool to their financial
detriment.
The Departments are of the view that it is in plans', issuers', and
developers' best interests to provide accurate information. However,
the Departments will monitor the accuracy of the information provided
through third-party developers and secondary entities and will take
information obtained through this monitoring into account for future
regulatory action or guidance, as appropriate.
One commenter recommended that any information made available to
the public should provide an explanation of why the cost of care is
variable among hospitals. The commenter further suggested the
explanation reference unique challenges faced by essential hospitals
that care for a larger proportion of vulnerable patients.
Being mindful of the goal to provide sufficient technical
flexibility in the formatting of the machine-readable files, the
Departments decline to require plans and issuers to include specific
supplementary information beyond reporting the data specified for the
machine-readable file formats. As noted above, nothing in the final
rules prevents a plan or issuer from providing supplementary materials,
including footnotes, disclaimers, data dictionaries, and other
explanatory language, as accompaniments with the machine-readable
files. The Departments are of the view that any additional context
around the machine-readable files that can be provided through
supplementary materials are likely to be a benefit to consumers and
others who seek to understand and use the data contained in the
machine-readable files. The Departments recommend plans and issuers
work closely with providers, consumers, developers, community leaders,
and other stakeholders to ensure that all perspectives are taken into
account when developing materials supplemental to the machine-readable
files. While declining to require plans and issuers to include a
specific explanation for why the cost of care could vary among
hospitals, the Departments acknowledge that this information is an
example of appropriate explanatory language that could accompany the
machine-readable files.
The final rules adopt, with modifications, the requirements that
plans and issuers publicly disclose applicable in-network rates
(including negotiated rates, derived amounts, and underlying fee
schedule rates), out-of-network allowed amounts for covered items and
services, including prescription drugs, through machine-
[[Page 72221]]
readable files. The final rules also adopt the requirement that plans
and issuers publicly disclose in-network historical net prices for
covered prescription drugs through a machine-readable file. In
recognition of the unique pricing attributes of prescription drugs, the
final rules require the reporting of information on prescription drugs
that would have been included in the In-network Rate File (referred to
as the Negotiated Rate File in the proposed rules) in a separate
machine-readable file, as described later in this preamble. The
Departments continue to be of the view that the release of this
information is appropriate and necessary to empower consumers to make
informed decisions about their health care, spur competition in health
care markets, and to slow or potentially reverse the rising cost of
health care items and services.
The Departments stated the intention in the proposed rules to make
available non-substantive technical implementation guidance through the
collaborative GitHub platform (an online hosting platform for
development and source code management that permits version control),
which will facilitate further technical assistance in addressing how
unique plan designs can comply with the requirements of the final
rules, as needed. The Departments received comments that supported the
Departments' development of specific technical standards for the files
to which plans and issuers must adhere. One commenter recommended the
Departments provide guidance to plan sponsors who are able to provide
some, but not all, of the file data elements. Another commenter stated
that the proposed rules do not make clear how to report items and
services provided through capitated and bundled payment arrangements in
the files; noting that this information is necessary for consumers to
measure provider value. One commenter supported the Departments'
statement that it would provide technical implementation guidance for
the files but requested a robust public comment solicitation far in
advance of the applicability date for the rules.
The Departments are of the view that providing specific technical
direction in separate technical implementation guidance, rather than in
the final rules, will better enable the Departments to update the file
technical requirements to keep pace with and respond to technological
developments. The Departments note that the technical implementation
guidance is intended to facilitate a collaborative effort between the
Departments and plans and issuers in order for plans and issuers to
meet the public disclosure requirements of the final rules, while
providing flexibility to account for unique IT systems, and issuer and
plan attributes. To the extent a plan's or issuer's unique attributes
(such as use of an alternative contracting model) are not addressed
sufficiently through the technical implementation guidance, the
Departments intend to provide targeted technical assistance to help
ensure all plans and issuers are able to meet the public disclosure
requirements under the final rules. Therefore, the Departments are
developing technical implementation guidance for plans and issuers,
which will be available on GitHub, to assist them in developing the
machine-readable files.
In the proposed rules, the Departments indicated that minimum
requirements for standardized data elements would be necessary to
ensure users would have access to accurate and useful pricing
information. Without such baseline requirements, the negotiated rate
and allowed amount data for out-of-network services made available by
each group health plan and health insurance issuer could vary
dramatically. This would further create a disincentive to health care
innovators developing tools and resources to enable consumers to
accurately and meaningfully use, understand, and compare pricing
information for covered items and services across providers, plans, and
issuers. Accordingly, under the proposed rules, a plan or issuer would
be required to publish two machine-readable files. The first file would
include information regarding rates negotiated with in-network
providers. The second file would include historical data showing
allowed amounts for covered items and services furnished by out-of-
network providers. The preamble to the proposed rules referred to these
files as the Negotiated Rate File and the Allowed Amount File,
respectively. For the final rules, the file referred to as the
Negotiated Rate File in the proposed rules has been renamed the In-
network Rate File to reflect modifications made in the final rules to
ensure the file accommodates plans and issuers operating under payment
models other than the fee-for-service (FFS) model. The final rules
adopt the requirement to produce both the In-network Rate File and
Allowed Amount File with the modifications discussed elsewhere in this
preamble. As previously discussed, the final rules also adopt the
requirement to produce an additional file, referred to in this preamble
as the Prescription Drug File through which plans and issuers are
required to publicly disclose negotiated rates and historical net
prices connected to prescription drugs.
As noted, the final rules modify the In-network Rate File
requirements to clarify the expectations for reporting negotiated rates
(or comparable derived amounts, which are explained in detail later in
this section) for plans and issuers using alternative reimbursement
models. The final rules also clarify that plans and issuers must
include an underlying fee schedule rate when one is used to determine
cost-sharing liability, where that amount differs from the negotiated
rate (or comparable derived amount) used to determine provider
reimbursement.
The final rules modify the Allowed Amount File to clarify that it
must also include information related to billed charges in addition to
allowed amounts. The final rules also finalize additional requirements
for the In-network Rate File, Allowed Amount File, and Prescription
Drug File to require plans and issuers to include a Place of Service
Code and a provider tax identification number (TIN) in addition to the
provider NPI. These modifications are discussed in more detail later in
this section of this preamble.
Specific Content Elements
In the proposed rule, the Departments indicated that the Negotiated
Rate File and the Allowed Amount File would be required to include
content elements discussed in this section of this preamble. In the
final rules, these content elements continue to apply to the In-network
Rate File and the Allowed Amount File, as well as to the Prescription
Drug File, except where otherwise indicated.
a. First Content Element: Name and Identifier for Each Coverage Option
The first content element that plans and issuers will be required
to include in the machine-readable files is the name and identifier for
each coverage option offered by a group health plan or health insurance
issuer. For the identifier, the Departments proposed that plans and
issuers use their Employer Identification Number (EIN) or Health
Insurance Oversight System (HIOS) IDs, as applicable. The Departments
sought comment on whether EINs and HIOS IDs are the appropriate
identifiers for this purpose. The Departments also sought comment on
whether there are other plan or issuer identifiers that should be
considered and adopted.
The Departments did not receive any comments on this content
element, and the final rules adopt this provision with
[[Page 72222]]
modifications to ensure clarity of the expectations for reporting. As
reflected in the updated regulatory text, the Departments are
clarifying whether an EIN or HIOS ID is applicable for this element.
Plans and issuers must include their HIOS ID at the 14-digit product
level unless the plan or issuer does not have a HIOS ID at the plan or
product level, in which case the plan or issuer must use the HIOS ID at
the 5-digit issuer level. If a plan or issuer does not have a HIOS ID,
it must use its EIN.
b. Second Content Element: Billing Codes
The second content element that plans and issuers will be required
to include in the machine-readable files is any billing code consistent
with the definition of billing code provided in the final rules,
including:
A CPT code,
a Healthcare Common Procedure Coding System (HCPCS) code,
a DRG,
a National Drug Code (NDC) (The final rules define the NDC
code as a unique 10-digit or 11-digit 3-segment number assigned by the
Food and Drug Administration (FDA), which provides a universal product
identifier for drugs in the United States),\168\ or
---------------------------------------------------------------------------
\168\ In the preamble to the HIPAA regulations, HHS stated that
it was adopting a uniform 11-digit format to conform with customary
practice used in computer systems (65 FR 50314, 50329). (Aug. 17,
2000). The HIPAA 11-digit NDC format is standardized such that the
labeler code is always 5 digits, the product code is always 4
digits, and the package code always 2 digits. To convert a 10-digit
NDC to an 11-digit HIPAA standard NDC, a leading zero is added to
the appropriate segment to create the 11-digit configuration as
defined above. See 83 FR 38666 (Aug. 7, 2018).
---------------------------------------------------------------------------
another common payer identifier used by a plan or issuer,
such as a hospital revenue code, as applicable, and a plain language
description for each billing code.
The Departments proposed to require that plans and issuers
associate each negotiated rate or out-of-network allowed amount with a
CPT, HCPCS code, DRG, NDC, or other common payer identifier, as
applicable, because plans, issuers, and providers uniformly understand
these codes and commonly use them for billing and paying claims
(including for both individual items and services and items and
services provided under a bundled payment arrangement). The Departments
also proposed that plans and issuers must include plain language
descriptions for each billing code. In the case of items and services
that are associated with common billing codes (such as the HCPCS
codes), the Departments specified that the plan or issuer could use the
codes' associated short text description.
In order to ensure that the machine-readable files provide
meaningful information to consumers, as well as other stakeholders, the
final rules adopt this content element as proposed, with the following
modifications. For clarity, the regulation text is amended to remove
language that merely restated the definition for the term ``billing
code'' for each machine-readable file.\169\ This modification has been
made purely to streamline the regulatory language, and it does not
substantively alter the requirement to include a billing code, except
as otherwise noted in this preamble. Additionally, along with
separating prescription drugs into a separate machine-readable file,
the final rules include a modification that clarifies that, in the case
of prescription drugs, plans and issuers may only use the NDC as the
billing code type because, as discussed later in this preamble, the
accuracy of pricing information for prescription drugs requires precise
and specific product information, including package size and
manufacturer, which can only be achieved through the use of the NDC
billing code. However, the Departments recognize that prescription drug
products may be included in the In-network Rate File to the extent a
plan or issuer uses an alternative payment arrangement, such as a
bundled payment arrangement that includes prescription drugs. Therefore
the final rules clarify that the In-network Rate file must include the
required information under paragraph (b)(1)(i) of the final rules for
all covered items and services, except for prescription drugs that are
subject to a fee-for-service reimbursement arrangement, which would be
reported in the prescription drug machine-readable file pursuant to
paragraph (b)(1)(iii) of the final rules.
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\169\ Specifically, the Departments have removed the following
language from billing code requirements for the machine-readable
files: ``. . . or other code used by the group health plan or health
insurance issuer to identify covered items or services for purposes
of claims adjudication and payment.''
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The final rules require plans and issuers to include in the
machine-readable files a billing code or other code used to identify
covered items or services for purposes of claims adjudication, payment,
and cost-sharing liability when making public the disclosure required
under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR
147.212. The final rules adopt the requirement that plans and issuers
associate each amount required to be reported with a CPT, HCPCS, DRG,
NDC, or other common payer code identifier, as applicable, because
plans, issuers, and providers uniformly understand these codes and
commonly use them for billing and paying claims (including for both
individual items and services and for bundled payment arrangement). As
provided by the definition of billing code in the final rules, the
Departments intend to provide flexibility to plans and issuers to make
the data available through the codes that they use for billing
services. While the final rules do not require plans and issuers to use
a specific billing code (for example, CPT codes) for making public the
disclosures required through the final rules, definition of billing
code states that it is the code used by the plan or issuer ``for
purposes of billing, adjudicating, and paying claims for a covered item
or service.'' Therefore, where a plan or issuer uses a CPT code to
identify a covered item or service for purposes of billing,
adjudicating, and paying claims for that covered item or service, then
they would need to use the CPT code in order to make public the
disclosure required through the final rules for that item or service.
One commenter recommended that the negotiated rates should be
clearly stated in plain language that should be easy to understand
rather than provided by billing codes through the machine-readable
files. As an alternative, the Departments received some comments
stating that the Departments should require hospitals and health
insurance issuers to disclose all negotiated reimbursements by
International Classification of Disease (ICD) code.
The preamble to the proposed rules identified several common
billing codes, noting that the list provided was not exhaustive.
Further, the Departments did not explicitly prohibit including ICD-10
codes on the file. The Departments note that nothing in the final rules
would constrain plans or issuers from including ICD codes in the
machine-readable files when these codes are used by the plan or issuer
in a manner that meets the definition of a billing code in the final
rules. In other words, where the plan or issuer uses an ICD code to
identify health care items or services for the purpose of billing,
adjudicating, and paying claims for a covered item or service, the plan
or issuer may use the ICD code in the machine-readable files. As
discussed earlier in this preamble, the Departments intend to issue
technical implementation guidance; this guidance will include sample
file schemas for the machine-readable files. To facilitate
identification of the billing code type,
[[Page 72223]]
there will be an indicator in the file schemas that will allow plans
and issuers to specify the particular type of billing code entered for
each data entry in the machine-readable files.
The Departments are aware that some covered items and services may
not have a corresponding HCPCS, ICD, DRG, NDC or CPT code. The
Departments clarify that plans and issuers are still required to
include these covered items and services in their machine-readable
files regardless of whether all corresponding data elements are
available. When a covered item or service does not have a corresponding
HCPCS, ICD, DRG, or CPT code associated with an item or service, a plan
or issuer is permitted to choose its own indicator or other method to
communicate to the public that there is no corresponding code. In the
alternative, a plan or issuer is permitted to use the code to be
defined by the Departments in technical implementation guidance issued
along with the final rules that indicates that an item or service is
not defined.
At this time, the Departments have concluded that the common data
requirements adopted by the final rules, which include a requirement to
include a plain language description for each billing code, provides
consumers with sufficient information to meaningfully inform health
care purchasing decisions.
Regarding information about prescription drug pricing, a commenter
also suggested that, in lieu of NDC or HCPCS codes, a useful unit for
reporting for drugs would be the RxNorm concept unique identifier
(RxCUI).\170\ The commenter suggested use of RxCUIs because it would
minimize burden by reducing the list of entries (3,000 to 4,000 RxCUIs
down from 100,000 active NDCs) and because existing prescription drug
machine-readable file requirement for Medicare Part D (Part D) and QHPs
use RxCUIs.
---------------------------------------------------------------------------
\170\ The Departments note that the comments used the term ``Rx
Common Unit Identifier'' to identify the full phrase for the RxCUI.
The Departments assume that this is a misnomer and that the
commenter was referring to RxNorm concept unique identifier, which
is the generally accepted term for the acronym RxCUI.
---------------------------------------------------------------------------
The Departments appreciate the commenter's alternative suggestion
for including prescription drug information in the machine-readable
files. The Departments considered requiring prescription drug pricing
information through an alternative identifier. The Departments
understand that an RxCUI could minimize the burden on plans and issuers
by reducing the number of codes required to be included in the
Prescription Drug File. RxCUI is a drug naming system that is produced
by the National Library of Medicine (NLM), and RxCUIs are unique
identifiers, which can represent multiple NDCs for similar drug
products with the same brand name, active ingredient, strength and dose
form (for example, multiple package sizes and/or manufacturers can be
represented by a single RxCUI). The NDC, in contrast, is a unique 10-
digit or 11-digit 3-segment number, which provides a universal product
identifier for drugs in the United States. The three segments of the
NDC identify: The labeler (any firm that manufactures the drug); the
product (specific strength, dosage form, and formulation of a drug);
and the commercial package size and types. As noted above, multiple
NDCs can be encompassed by one RxCUI, which is why there are many fewer
RxCUI codes than NDCs. However, the accuracy of pricing information
requires precise and specific product information, including package
size and manufacturer. The Departments are concerned that permitting
drug pricing information disclosures to be made through RxCUIs would
potentially lead to inaccurate or misleading information being provided
to the consumer. If drug pricing information is provided in the
machine-readable files in the form of RxCUIs, then plans and issuers
may not be able to provide the manufacturer negotiated rate, especially
for those RxCUIs that include NDCs from several manufacturers.
Some commenters noted that, because RxCUI is used by the Part D
program and in the QHP program, the Departments should also require
RxCUI in the machine-readable file for consistency across programs.
While the Departments acknowledge that RxCUI is used in some contexts
in both the Part D and QHP programs, namely formulary development,
these programs do not exclusively use RxCUI. Indeed, both the Part D
and QHP programs use NDC in addition to RxCUI, and NDCs are more
generally used when information is required to be submitted to CMS for
payment programs. For example, the Part D program receives the NDC on
claims submitted by Part D plan sponsors through Prescription Drug
Events (PDEs) and issuers in the individual and small group market
include NDCs on claims data submitted to issuers' EDGE servers for HHS
risk adjustment purposes. In short, other programs cited by commenters
actually use NDCs for prescription drugs data submissions, particularly
for payment that is similar to the pricing data required by the final
rules. The Departments therefore conclude that requiring use of NDCs
for the prescriptions drug pricing information included in the machine-
readable files is consistent with the practices CMS follows in other
programs. Therefore, as stated earlier, the Departments are requiring
that the only allowable billing code for prescription drugs in the
machine-readable files is the NDC. The Departments determined that the
NDC should be the required billing code for the reasons stated above
and because the NDC is a standard billing code required for
prescription drug transactions.
c. Third Content Element: In-Network Applicable Amounts (Negotiated
Rates, Amounts in Underlying Fee Schedules, and Derived Amounts); Out-
of-Network Allowed Amounts; or Negotiated Rates and Historical Net
Prices for Prescription Drugs
The third-content element in the machine-readable files depends on
the type of file: in-network amounts for the In-network Rate File,
allowed amounts and historical billed charges for the Allowed Amount
File, or negotiated rates and historical net prices for the
Prescription Drug File.
All Machine-Readable Files
The proposed rules specified that the specific pricing information
within each file would have to be associated with a provider
identifier, specifically the provider's NPI. Some commenters suggested
additional data elements to support accurately identifying the provider
through the machine-readable files. One commenter recommended that the
Departments include the Place of Service Code in the machine-readable
files. The commenter explained that this data element would clarify
prices when provider entities associated with the same NPI have
multiple sites of service. Place of Service Codes are CMS-maintained
two-digit codes that are placed on professional claims, including
Medicare, Medicaid, and private insurance, to indicate the setting in
which a service was provided.\171\ The Place of Service code set is
required for use in the implementation guide adopted as the national
standard for electronic transmission of professional health care claims
under HIPAA.\172\
---------------------------------------------------------------------------
\171\ ``Place of Service Code Set.'' Centers for Medicare &
Medicaid Services. Available at: https://www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.
\172\ ``Place of Service Codes.'' Centers for Medicare &
Medicaid Services. Available at: https://www.cms.gov/Medicare/Coding/place-of-service-codes.
---------------------------------------------------------------------------
[[Page 72224]]
The Departments have considered this comment and agree that, in
addition to NPI, including a Place of Service Code is important where a
provider could be using the same NPI for multiple places of service.
For instance, the same procedure from the same provider NPI received at
an ambulatory surgery center (Place of Service Code 24) could have a
significantly different price if received at an on-campus outpatient
hospital (Place of Service Code 22). The Departments are of the view
that being able to identify the place of service would be beneficial to
consumers seeking to rely on the machine-readable files or third-party
applications developed using the information publicly disclosed through
the machine-readable files, in order to make health care purchasing
decisions. The Departments are also of the view that this data element
will help provide valuable insights regarding market dynamics for
researchers, employers, regulators, and other files users. Because the
Place of Service Code is information that must be included on a
professional medical claim, the Departments do not foresee any issue
with plans and issuers including this data element in the machine-
readable files in addition to the NPI. For these reasons, the
Departments are finalizing a requirement to include the Place of
Service Code in all three machine-readable files.
In addition to the NPI and the Place of Service Code, the
Departments have also become aware, through independent research, that
a provider's TIN can be relevant to communication of accurate
negotiated rates and allowed amounts information. It is the
Departments' understanding that negotiated rates for items and services
are based on the unique combination of a provider (NPI), service or
item location (Place of Service code), and the TIN under which the
provider is furnishing the item or service. If the TIN is not required
in the file, the Departments are concerned that plans and issuers could
report multiple negotiated rates for the same NPI for the same item or
service without context to identify the underlying source of the
difference. For example, if a provider NPI has a relationship with two
different entities that have negotiated rates and bills under both of
these entities, the same item or service for that provider NPI could
appear in the report with two different negotiated rates. Without the
TIN, consumers of the file would not be able to discern the reason for
the difference in the two distinct negotiated rates. With the TIN,
consumers of the file could see that the provider is billing for the
same services under two separate entities. Therefore, if this unique
combination of NPI, Place of Service Code, and TIN is not required, the
pricing information represented in the machine-readable files might not
present a complete and accurate picture of the market or provide
consumers with reliable data upon which to base health care purchasing
decisions. The Departments are of the view that this information is
crucial to ensure that consumers are ultimately receiving location-
specific pricing information upon which they can rely to help make
informed health care purchasing decisions. In order for the machine-
readable files to provide meaningful and actionable information, the
final rules adopt a modification to all three machine-readable files,
to require plans and issuers to provide the provider TIN in the file in
addition to provider NPI and the Place of Service Code.
The Departments have updated the technical implementation guidance
and schemas for all three machine-readable files, so that location-
specific pricing information can be provided in the machine-readable
files. This guidance will also provide more details on how the Place of
Service Code, TIN, and NPI should be reported in order to represent the
information for which public disclosure is required through the
machine-readable files. The Departments are aware that this
modification to the machine-readable files will increase the complexity
and size of the machine-readable files and have considered this
additional burden in the Information Collection Requests (ICR) section
of the of the final rules. The benefits of including the Place of
Service Code and TIN outweigh the costs, as the Departments are of the
view that location-specific pricing information is critical to the
meaningfulness of these files for the public.
Another commenter noted that using NPIs to identify providers would
make it difficult for consumers to use the machine-readable files
because consumers do not usually have NPI information. The commenter
stated that it would also be useful for consumers using the In-network
Rate Files (including the uninsured and those shopping for alternative
coverage) to have access to public information that lists the providers
who participate in local plan and issuer networks.
The Departments agree that including provider names in the machine-
readable files in addition to NPIs would help consumers and other
stakeholders review and use the machine-readable files. However, the
Departments have some concerns about requiring inclusion of provider
names in the files. From a technical perspective, the Departments are
concerned that inclusion of provider names, which do not have a
consistent character length and can be quite long, will increase the
size of the machine-readable files and, therefore, increase the burden
of the files for plans and issuers. Additionally, provider names may
include non-alphanumeric or other non-standard character encoding types
that could interfere with the coding of the machine-readable files and
cause defects. The Departments are concerned that the additional
quality assurance procedures that plans and issuers would need to
implement in order to address these issues could add even more burden
with limited benefit.
In addition, because the Departments expect the greatest benefits
of these machine-readable files will be through the innovative tools
developed by third parties, the Departments are of the view that the
lack of availability of provider names in the machine-readable files is
not a significant concern. The Departments anticipate that third-party
internet-based developers and other secondary entities will be able to
link the NPIs in the machine-readable files to publicly available
provider information. The Departments note that there are several
internet-based NPI lookup tools available online, including CMS's
National Plan & Provider Enumeration System (NPPES) NPI registry.\173\
Nothing in the final rules prevents a plan or issuer from linking to an
NPI lookup tool or providing more information for consumers and other
stakeholders on its website through supplementary materials supporting
the machine-readable files.
---------------------------------------------------------------------------
\173\ CMS's NPPES registry is available online at the following
website address: https://npiregistry.cms.hhs.gov/.
---------------------------------------------------------------------------
For these reasons, the final rules do not require plans and issuers
to include provider names in addition to NPI, TINs, and Place of
Service Codes in the three machine-readable files.
In-Network Rate File
The Departments finalize with modifications the proposed
requirement that group health plans and health insurance issuers
publish as the third content element negotiated rates in a machine-
readable file for all covered items and services--except that the
Negotiated Rate File in the proposed rules has been re-named the In-
network Rate File. With the exception of information relevant to
prescription drug products that are included as part
[[Page 72225]]
of an alternative payment arrangement (such as a bundled payment
arrangement), the In-network Rate File will exclude information
relevant to prescription drugs, as that information will be provided in
the third machine-readable file. Based on comments and technical
expertise within the agencies, the Departments have made modifications
to clarify the expectations for reporting negotiated rates (or
comparable derived amounts as explained elsewhere in this section) for
plans and issuers using alternative reimbursement models for health
care items and services. These modifications also clarify that plans
and issuers must include an underlying fee schedule rate when one is
used to determine cost-sharing liability, where that amount differs
from the negotiated rate (or comparable derived amount) used to
determine provider reimbursement. The Departments also finalize this
change to reflect other modifications to the proposed rules meant to
ensure the required In-network Rate File accommodates plans and issuers
operating under payment models other than a standard fee-for-service
(FFS) model.
In the proposed rules, the third content element was negotiated
rates under a plan or coverage regarding each covered item or service,
including prescription drugs furnished by in-network providers. To the
extent a plan or issuer reimburses providers for an item or service
based on a formula or reference based-pricing (such as a percentage of
a Medicare reimbursement rate), the proposed rules would have required
the plan or issuer to provide the calculated dollar amount of the
negotiated rate for each provider.
In the proposed rules, the Departments expressed the understanding
that some plans and issuers do not vary negotiated rates across in-
network providers. For instance, some plans and issuers have a
negotiated rate that applies to every provider in a certain network
tier. In such a case, the Departments proposed to require the plan or
issuer to provide the negotiated rate for a covered item or service
separately for every provider that participates in that tier of the
network. If the plan or issuer reimburses for certain items and
services (for example, maternity care and childbirth) through a bundled
payment arrangement, the Departments proposed to require the plan or
issuer to identify the bundle of items and services by the relevant
billing code.
The Departments also proposed to require plans and issuers to
include the last date of the contract term for each provider-specific
negotiated rate that applies to each item or service (including rates
for both individual and bundled items and services).
Several commenters suggested modifications to the requirement for
public disclosure of negotiated rates, which they claimed would help
mitigate the risk of unintended consequences, such as anticompetitive
practices and increased health care prices. Commenters suggested that
the final rules require plans and issuers to disclose the median rate
or lowest negotiated rate instead of negotiated rates. Other commenters
also expressed the opinion that information presented as summary or
aggregated data would be more helpful for consumers. One of these
comments noted that this could be achieved through plans identifying a
range of in-network rates for common services.
The Departments considered modifying the requirement to require
plans and issuers to report the median negotiated rate, the lowest
negotiated rate, or some other aggregated negotiated rate. The
Departments noted in the proposed rules that consumers, researchers,
and regulators gaining access to pricing information, including
information on the variation in prices, could place downward pressure
on health care prices and reduce overall health care spending, which is
one of the goals of the final rules. The Departments are concerned that
using an aggregated or otherwise summarized rate would not sufficiently
address issues of pricing variation and could undermine other goals of
price transparency efforts. A median or summarized rate would not be as
reliable for insured or uninsured consumers to use when making health
care purchasing decisions as it is individual prices upon which these
consumers must rely to make health care purchasing decisions. Under
standard economic theory, it is individual prices, and consumers'
responses to those prices, that drive market forces. If the public
disclosures do not include specific individual prices for in-network
items and services, consumers may not have actionable information upon
which to rely to make specific decisions.\174\ A median or summarized
rate would not address the issue of price variation or dispersion, as
it would mask the variation in a given geographic area.\175\
Additionally, a median or summarized rate could mask the differences
between plans and coverages in a manner incompatible with drawing
comparisons between coverage options. Therefore, the Departments are of
the view that release of alternative data points, such as aggregated
negotiated rates, or other summarized forms of negotiated rates, would
not sufficiently advance the price transparency efforts and could
undermine the intended impacts of the In-network Rate File.
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\174\ Stigler, G. ``The Economics of Information.'' The Journal
of Political Economy. Volume 69. Issue 3. June 1961. Available at
https://home.uchicago.edu/~vlima/courses/econ200/spring01/
stigler.pdf.
\175\ Id.
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Commenters suggested the Departments limit the requirement for
public disclosure of negotiated rate information in a way that protects
plans and issuers from reverse engineering specific rates. For example,
a commenter suggested the Departments limit the disclosure to plans and
employer plan sponsors, while another commenter suggested that the
final rules require plans and issuers to provide limited information to
the public, such as statistical ranges, or rates distributions and
require the provision of more detailed information to other
stakeholders.
The Departments considered limiting these disclosures by
stakeholder type such that the disclosure of the most detailed
information to the widespread public would be more limited. The
Departments' determined that these limitations would conflict with the
statute, which requires public disclosure, and the goals of the final
rules. The Departments' goal is to empower consumers through the
disclosure of actionable pricing information through the In-network
Rate Files, as translated into consumer-friendly tools by third-party
application developers.
Some commenters expressed the view that public disclosure of rates
by plans and issuers with alternative reimbursement models should be
required and suggested the Departments work with stakeholders to
establish requirements that are consistent with innovative payment
models. One commenter stated that the Departments should not exclude
from the negotiated file requirements plans with reimbursement
arrangements different from FFS arrangements, such as plans with
reimbursements based on a capitated amount or a value-based agreement.
Some commenters noted that the release of negotiated rates places
emphasis on FFS provider contracting and may hinder innovation in
alternative payment contracting models, such as value-based
contracting.
The Departments received some comments on how the Departments could
require plans and issuers to report
[[Page 72226]]
capitated and bundled payment arrangements through the In-network Rate
File. One commenter noted that plans with a capitated arrangement
should be able to assign a price to items and services based on an
internal methodology. The commenter observed that plans with capitated
payment arrangements must assign prices for purposes of submission of
claims in support of the HHS risk adjustment program under 45 CFR
153.710(c). Some commenters, however, argued that implementing some
aspects of the proposed rules would not be feasible, such as listing
prices for quality-adjusted and risk-adjusted contracts, which can only
be calculated after the fact.
By contrast, other commenters did not support a requirement for
plans and issuers with alternative reimbursement arrangements to make
public the disclosures required through the In-network Rate File.
Commenters stated that releasing negotiated rate information for
bundled or capitation arrangements would be a significant operational
burden and could lead to inaccuracies and misinformed consumers. For
example, several commenters noted that the entire suite of services
that a consumer might need to look up for an episode of care is not
known to patients or providers prior to the receipt of care. Another
commenter noted that the information could be misleading to consumers
because prices may not include the services provided by all providers
that are involved in a patient's hospital care such as surgeons and
anesthesiologists.
The Departments agree that plans and issuers that use alternative
reimbursement arrangements should still be subject to requirements to
disclose rates through the In-network Rate File. Nowhere in the
proposed rules did the Departments indicate that only plans and issuers
that reimburse on a standard FFS model would be required to make public
the disclosure of negotiated rates. As evidenced by the discussion of
reporting of bundled payment arrangements and plans and issuers using
alternative reimbursement models such as formula-based or reference-
based pricing in the proposed rules, the Departments intended the
disclosures required through the final rules to apply to all plans and
issuers, regardless of reimbursement model. The Departments clarify
that plans and issuers that reimburse providers on a basis that is
different from a standard FFS model would still be required to make
public the disclosures of in-network negotiated rates, out-of-network
allowed amounts and prices for prescription drugs as required by the
final rules.
Later in this preamble, the Departments have summarized the general
reporting expectations for several alternative reimbursement models,
including bundled payment arrangements and capitation arrangements
(including sole capitation arrangements and partial capitation
arrangements), reference-based pricing without a defined network,
reference-based pricing with a defined network, and value-based
purchasing. This summary is not meant to be exhaustive, as the
Departments are aware that other alternative reimbursement or
contracting models exist. However, before clarifying how these payment
arrangements would work under the final rules, the Departments note
modifications to the requirements for the pricing information that must
be publicly disclosed through the In-network Rate File.
Some commenters stated that the proposed rules did not acknowledge
that negotiated rates alone provide an inaccurate or incomplete picture
of health care item and service pricing. In response, the Departments
conducted additional research to understand how the final rules could
require the appropriate level of detail in the In-network Rate File and
provide a more complete and transparent picture of prices of health
care items and services. In response to comments, and as a result of
this additional research, the Departments are modifying the language
describing the requirement for the pricing information that must be
publicly disclosed through the file. Specifically, the Departments are
clarifying that the In-network Rate File should include all applicable
rates, even where not referred to as negotiated rates. As described in
the final rules, this could include negotiated rates, an underlying fee
schedule rate or, derived amounts, as applicable. These modifications
are intended to clarify disclosure requirements for plans and issuers
that use alternative reimbursement arrangements and to ensure that the
rates upon which consumer cost-sharing liability is determined as well
as negotiated rates are publicly disclosed through the In-network Rate
File. The Departments are of the view that this approach is consistent
with the goals of transparency as outlined in the proposed rules
because it ensures that the In-network Rate File will be both
meaningful for consumers and requires transparency in price disclosures
that will promote increased competition in health care markets. Without
this clarification, the In-network Rate File could have potentially
excluded rates that are used to determine cost-sharing liability, which
is essential information upon which consumers would need to rely to
make health care purchasing decisions. Further, retaining as proposed
the requirement to include the negotiated rates that plans and issuers
use to determine provider reimbursement is crucial to price
transparency efforts, which will help foster competition and lower
prices. Public disclosure of negotiated rates and derived amounts will
also support research and regulatory oversight. For example, this
information will help researchers evaluate alternative payment models
in relation to the traditional FFS payment model, which could help spur
more innovation in health care markets. State regulators will also be
able to gain further insight into the various payment models, which
would support general oversight of plans and issuers using different
payment models, and could support market reform efforts.
One commenter noted that plans and issuers that use capitated
reimbursement arrangements may assign prices to items and services as a
normal course of business. Thus, they should be able to disclose those
prices as part of the In-network Rate File. The Departments agree. The
final rules require a plan or issuer that does not have a negotiated
rate to disclose a ``derived amount,'' which is defined as the price
that a plan or issuer assigns an item or service for the purpose of
internal accounting, reconciliation with providers, or for the purpose
of submitting data in accordance with the requirements of 45 CFR
153.710(c).
Title 45 CFR 153.710(c) sets forth a process through which
capitated plans that do not generate individual enrollee claims in the
normal course of business must submit data for the purpose of the HHS-
operated risk adjustment program.\176\ As stated in the preamble to the
HHS Notice of Benefit and Payment Parameters for 2014 final rule, many
capitated plans currently use some form of encounter data pricing
methodology to derive claims' prices, often by imputing an amount based
upon the Medicare fee-for-service equivalent price or the usual,
customary, and reasonable equivalent that would have been paid for the
service in the applicable state market risk pool.\177\ For
[[Page 72227]]
the purposes of 45 CFR 153.710(c), an issuer offering a capitated plan
is required to use its principal internal methodology for pricing those
encounters for purposes of submitting risk adjustment data, such as the
methodology in use for other State or Federal programs (for example, a
methodology used for the Medicare Advantage market).\178\ If an issuer,
including an issuer of a capitated risk adjustment covered plan, has no
such methodology, or has an incomplete methodology, it must supplement
the methodology in a manner that yields derived claims that are
reasonable in light of the specific market that the plan is serving.
Given these requirements under 45 CFR 153.710(c), the Departments are
of the view that most issuers offering capitated plans that do not
process claims on an individual basis, and therefore do not have
negotiated rates, will have a derived amount.
---------------------------------------------------------------------------
\176\ HHS has operated the risk adjustment program for the
individual and small group markets under section 1343 of PPACA on
behalf of all states and the District of Columbia since the 2017
benefit year.
\177\ 78 FR 15410, 15499-15500 (Mar. 11, 2013).
\178\ Id., see also 78 FR 15410, 15470-71 (Mar. 11, 2013).
---------------------------------------------------------------------------
The Departments acknowledge that 45 CFR 153.710(c)does not apply to
group health plans or all health insurance issuers subject to these
rules and so they may not calculate derived amounts for this purpose.
The final rules do not require plans or issuers to develop a new
methodology for providing derived amounts if the plan or issuer does
not have an existing methodology used in the normal course of business.
Therefore, the final rules require plans and issuers that do not have a
negotiated rate to provide a derived amount, to the extent these
amounts are already calculated in the normal course of business. Where
a plan or issuer does not have a derived amount calculated in the
normal course of business, they are not required to provide a derived
amount.
The Departments also note that under the final rules, where a plan
or issuer includes in the In-network Rate File a comparable derived
amount in lieu of the negotiated rate (for example, under a capitation
arrangement where a specific negotiated rate is not available for a
particular item or service), they will be required to add a notation to
the machine-readable files indicating that the rate is subject to an
alternative payment arrangement. The Departments are also aware that
some plan and issuer contracting models use a mixture of approaches and
note that plans and issuers should follow the general guidelines (to be
provided by the Departments in the technical implementation guidance)
based on how a particular covered item or service is reimbursed where a
mixture of approaches is used in the same plan or coverage.
The final rules clarify that, where plans and issuers use
negotiated rates or a comparable derived amount and an underlying fee
schedule rate as defined in the final rules, they are required to
report both the negotiated rate or comparable derived amount and the
underlying fee schedule rate used for that item or service. Therefore,
the Departments are also modifying the In-network Rate File to require
public disclosure of an underlying fee schedule rate, when applicable.
The Departments are aware that under some reimbursement models, one set
of negotiated rates is used for provider reimbursement (or comparable
derived amounts are used for internal accounting purposes) and another
set of rates, referred to in the final rules as an underlying fee
schedule rate, is used for determining consumer cost-sharing liability.
The Departments view the modification to the In-network Rate File to
require public disclosure of an underlying fee schedule rate important
to ensuring the public disclosures required through the rules include
transparency in the prices used by all plans and issuers in making
determinations of consumer cost-sharing liability. The final rules
define the underlying fee schedule rates as the rate for an item or
service that a plan or issuer uses to determine a participant's,
beneficiary's, or enrollee's cost-sharing liability from a particular
provider or providers, when that rate is different from the negotiated
rate. For instance, under certain capitation payments which reimburse a
provider a PMPM rate, the PMPM rate would be the negotiated rate.
However, the plan or issuer would also have assigned a price for an
item or service from that provider for the purpose determining cost-
sharing liability; that amount is the underlying fee schedule rate.
Therefore, in this example, in the In-network Rate File, the plan or
issuer would be required to report the negotiated rate, which in this
case is the PMPM rate, and the underlying fee schedule rate used to
determine cost-sharing liability.
In the final rules, plans and issuers are required to disclose only
those rates that are applicable to their particular reimbursement
arrangement model. If a plan or issuer only uses one rate for
determining both provider reimbursement and consumer cost-sharing
liability, then only that rate would be applicable to the plan or
issuer, and therefore required to be disclosed through the In-network
Rate File. Where a plan or issuer uses an alternative reimbursement
arrangement and does not have a negotiated rate, as defined in the
final rules, the plan or issuer would be required to publicly disclose
through the In-network Rate File the derived amount, to the extent the
plan or issuer generates such an amount in the normal course of
business. If a plan or issuer has a negotiated rate or a derived amount
but does not also use that applicable rate to make determinations of
consumer cost-sharing liability, then the plan or issuer would be
required to publicly disclose both the negotiated rate or derived
amount and the underlying fee schedule rate used to determine consumer
cost-sharing liability.
The Departments note that, while a scenario where a plan or issuer
uses both negotiated rates or a comparable derived amount and an
underlying fee schedule rate in their operations is more likely to
occur under an alternative reimbursement model, it is possible to have
both a negotiated rate and an underlying fee schedule rate in an FFS
reimbursement arrangement. Such a scenario is possible where a plan
that uses a traditional negotiated rate to reimburse a provider for a
particular covered item or service and bases participant, beneficiary,
or enrollee cost-sharing liability upon a different rate for the same
item or service.
Under bundled payment arrangements, plans and issuers may reimburse
a provider for multiple services and items under a single billing code.
Under these arrangements, plans and issuers should provide a negotiated
rate (or comparable derived amount) for that single billing code and
list the items and services, including prescription drugs, that are
included in that bundle. If a negotiated rate (or comparable derived
amount) exists for each item and service, including prescription drugs,
within the bundle, the plan or issuer should include the negotiated
rate for the total bundle and also include in the In-network Rate File
the respective negotiated rates (or comparable derived amount) for all
covered items or services included in the bundle.
It is the Departments' understanding that, if the bundled payment
arrangement exists to the exclusion of any reimbursement arrangement
for the underlying services and items, payers and providers often
continue to track, for purposes of informing renegotiation of the
bundle, reimbursement at the level of the individual item or service
using a derived amount. For the In-network Rate File, plans and issuers
with this type of model are required to disclose the negotiated rate
for the total
[[Page 72228]]
bundle and the derived amounts for individual items or services in the
bundled payment arrangement. If a derived amount for these purposes
does not exist, then plans and issuers would not be required to report
a derived amount. Where a plan or issuer uses a derived amount or
reasonable estimate in lieu of the negotiated rate, they will be
required to add a notation to the machine-readable files indicating
that the rate is subject to an alternative payment arrangement.
The Departments acknowledge that there are many different types of
capitation models. As stated in the example earlier, for capitation
arrangements that reimburse a provider a capitated amount, such as a
PMPM, or a similar direct primary care arrangement, the plan or issuer
would report the negotiated rate, which in this case is the PMPM
amount, and the underlying fee schedule, as applicable. Under certain
other capitation models, the provider's capitation amount may be
weighted dependent upon certain characteristics of the participant,
beneficiary, or enrollee, such as age, gender, or co-morbidities. Plans
and issuers with this type of capitation arrangement should provide the
base negotiated rate, which is the negotiated rate before adjustments
have been made for certain participant, beneficiary, or enrollee
characteristics. Plans and issuers using capitation arrangements should
notate any entry that represents a capitated amount and list all items
and services, including prescription drugs that are covered under a
particular capitation amount in the In-network Rate File.
In some cases, a sole capitation arrangement exists, such as staff
model HMOs under which services are provided by in-network salaried
providers and there are neither negotiated rates nor an underlying fee
schedule rate. In this case, plans and issuers are required to include
a derived amount in the In-network Rate File. If an applicable rate (a
negotiated rate, derived amount, or underlying fee schedule rate) does
not exist for an item or service, then plans and issuers are not be
required to report pricing information for that particular item or
service.
The Departments are aware that some plans and issuers use a partial
capitation model where the plan or issuer reimburses providers under a
variable FFS amount in addition to a flat capitation amount. The
Departments expect plans and issuers using a partial capitation model
to make public the FFS negotiated rate as well as the capitation
amount. Plan and issuers must also add a notation to the file
indicating that a capitation arrangement (or a partially capitated
arrangement) exists. For specific items and services where plans and
issuers using this model do not have an FFS negotiated rate in addition
to a capitation amount (that is, for items and services where they do
follow a full capitation model), plans and issuers are required to
follow the reporting requirements described for sole capitation
arrangements.
Reference-based pricing without a defined network is an arrangement
where payers reimburse providers based on a percentage (usually 120
percent to 200 percent) of the Medicare rate, but do not have
contractual agreements with providers. The Departments expect there
will be no In-network Rate File for this type of arrangement because
the plan or issuer does not have in-network providers as defined in the
final rules.
By contrast, under a reference-based pricing model with a defined
network, payers have contractual agreements to reimburse providers
based on a percentage of a different rate that is known or determinable
by the parties (usually 120 percent to 200 percent of the Medicare
rate), which is subject to change based upon adjustments that can be
specific to the participant, beneficiary, or enrollee, such as age,
gender, and severity of illness. To represent this type of arrangement,
and other provider reimbursement models that are based upon
participant, beneficiary, or enrollee-specific adjustments, the final
rules clarify that plans and issuers are required to include for each
item or service in the In-network Rate File, the base negotiated rate
that applies before adjusting for participant, beneficiary, or enrollee
-specific characteristics. The negotiated rate in the referenced-based
pricing model must be represented as a dollar value that is the result
of the calculation of the referenced amount and the applicable
reference-based percentage. For example, a plan calculates provider
reimbursement using a reference-based pricing model that sets
reimbursement to Provider X at 120 percent of the Medicare rate for
covered Item A. The reference-based percentage used to determine the
base negotiated rate would be 120 percent. In the general course of
business, the plan determines the Medicare rate for Item A using
participant, beneficiary, or enrollee-specific characteristics, but,
because there is no specific participant, beneficiary, or enrollee for
purposes of populating the In-network Rate File, the plan or issuer
must report the base negotiated rate that would apply prior to
application of any participant, beneficiary, or enrollee-specific
characteristics. In this example, the Medicare rate for Item A is $150,
before applying adjusters for participant, beneficiary, or enrollee-
specific characteristics. Therefore, the plan would report a negotiated
rate for Item A when received from Provider X of $180 ($150 multiplied
by 120 percent) and must include this rate in the In-network Rate File.
Finally, under a reimbursement arrangement that adjusts payments or
reconciles provider payments after providing care, such as in many
value-based purchasing models, the plan or issuer must also provide the
base negotiated rate for the specific provider in the In-network File.
For instance, in a value-based purchasing model, payers may adjust
negotiated rates for a particular provider if the provider meets
certain contractual goals, which may be related to quality, volume, and
efficiency of care. The Departments clarify that quality or value
dependent weighting factors or adjusters are not required to be
included in the negotiated rate made public under the final rules.
As noted earlier in this preamble, nothing in the final rules
prevents a plan or issuer from providing supplementary materials,
including footnotes, disclaimers, data dictionaries, and other
explanatory language, as accompaniments with the machine-readable
files. For example, a plan or issuer may choose to provide clarifying
information related to how the negotiated rate, if reported as a base
negotiated rate, may change depending on quality or value-dependent
weighting factors, or participant, beneficiary, or enrollee-specific
factors such as the severity of illness, age, or gender. Because base
rates unadjusted for participant, beneficiary, or enrollee-specific
factors are required to be reported for reference-based pricing
arrangements, the Departments note that it is a best practice to
include a disclaimer noting that the rate could change subject to
participant, beneficiary, or enrollee-specific characteristics.
Some commenters noted that simply listing the negotiated rates
without context regarding overall cost would not help consumers make
informed decisions. The commenter further noted that consumer decision-
making could be harmed if relying on negotiated rate information
without context regarding provider billing practices. Other commenters
stated that non-negotiated billed charges would be useful as an
additional category of pricing information for the public, especially
for
[[Page 72229]]
the uninsured and those seeking out-of-network care. Another commenter
agreed that information on provider-billed charges is important for
transparency, but this commenter suggested that providers, not issuers,
would be the appropriate source of this information.
As discussed later in this preamble, the Departments are of the
view that inclusion of billed charges in the In-network Rate File is
unnecessary to achieve the goals of the final rules because in-network
providers are not permitted to balance bill participants,
beneficiaries, or enrollees as in-network providers have agreed to
accept the negotiated rate as payment in full (less any participant,
beneficiary, or enrollee cost-sharing liability) for the item or
service. However, inclusion of billed charges in the Allowed Amount
File will provide meaningful information when coupled with allowed
amount information because it will allow consumers to estimate their
potential balance billing liability when receiving items and services
furnished by out-of-network providers if balance billing is allowed in
their state. Therefore, inclusion of billed charges in the In-network
Rate File would not provide additional value for consumers.
Moreover, the Departments are of the view that inclusion of the
billed charge could be more misleading in the In-network Rate File
because the billed charge is very rarely what the consumer or the payer
ends up paying for a particular claim and may not have a clear
relationship with the negotiated rate or underlying fee schedule. While
the Departments agree that inclusion of billed charges in the In-
network Rate File would provide another data point for developers in
developing the tools, adding billed charges would also increase both
the size and complexity of the In-network Rate File. Because it appears
that inclusion of this data element could obscure other pricing
information and would not increase transparency of actual prices paid
by participants, beneficiaries, enrollees, or payers, the Departments
decline to add a billed charge data element requirement to the In-
network Rate File at this time.
As discussed earlier in this preamble, the final rules finalize a
requirement for plans and issuers to associate the pricing information
disclosed on each of the three machine-readable files with three data
elements that identify the provider and the location where the service
was provided: NPI, TIN, and Place of Service Code. For the In-network
Rate File, the Departments proposed that the negotiated rate should be
the rate that applies to each item or service that is associated with
the last date of contract term for each provider NPI. The final rules
modify this requirement to clarify that the applicable rates publicly
disclosed in the In-network Rate File should be the rates that apply to
each item or service that is associated with the last date of the
contract term or the contract expiration date for each provider as
identified by NPI, TIN, and Place of Service Code.
Allowed Amount File
For the Allowed Amount File, the third content element is
historical out-of-network allowed amounts for covered items and
services. The proposed rules would require plans and issuers to include
in the Allowed Amount File each unique out-of-network allowed amount in
connection with covered items or services furnished by a particular
out-of-network provider during the 90-day time period that begins 180
days prior to the publication date of the Allowed Amount File. As with
the In-network Rate File, where a plan or issuer reimburses providers
for an item or service based on a formula or reference based-pricing
(such as a percentage of a Medicare reimbursement rate), the plan or
issuer would be required to provide the calculated dollar amount of the
allowed amount for each provider. Allowed amounts would have to be
associated with the provider's NPI, TIN, and Place of Service code.
The Departments designed this reporting requirement to elicit
payment data that reflects recent out-of-network allowed amounts in
connection with claims for out-of-network covered services. The
Departments assumed these amounts would provide payment data that is
useful to consumers because it is reflective of the most recent
reimbursements. Specifically, the Departments proposed to require
reporting based on dates of service within 180 days of the Allowed
Amount File publication date to ensure that data is composed of recent
claims (rather than older claims from multiple time periods) and to
avoid the reporting of payments from inconsistent periods of time. The
Departments took the view that payment data from defined periods of
time would enable users to make meaningful comparisons across plans and
coverage options.
When disclosing an out-of-network allowed amount under this
requirement, the Departments proposed to require a plan or issuer to
disclose the actual amount the plan or issuer paid to the out-of-
network provider, plus the participant's, beneficiary's, or enrollee's
share of the cost. For instance, if the out-of-network allowed amount
for a covered service was $100, and the plan or issuer paid 80 percent
of the out-of-network allowed amount ($80) per the terms of the plan or
coverage, so that the participant, beneficiary, or enrollee was
responsible for paying twenty percent of the out-of-network allowed
amount ($20), the plan or issuer would report an out-of-network allowed
amount of $100. This unique payment amount would be associated with the
particular covered item or service (identified by billing code) and the
particular out-of-network provider who furnished the item or service
(identified by NPI, TIN, and Place of Service Code).
The Departments clarify that, in contrast to the In-network Rate
File, no special considerations for reporting alternative payment
arrangements are necessary for the Allowed Amount File because plans
and issuers are required to disclose actual amounts paid in the Allowed
Amount File and can therefore account for retrospective reconciliations
and weighting factors that require special considerations. For the
Allowed Amounts File, the Departments expect plans and issuers that
reimburse in-network providers using alternative payment methodologies
to adhere to the standard requirement of providing allowed amounts on
historical claims paid to out-of-network providers for each covered
item or service during the applicable reference period. Plans and
issuers generally do not reimburse out-of-network providers, with whom
they do not maintain a contractual relationship, under an alternative
payment arrangement. However, to the extent a plan or issuer uses an
alternative payment arrangement to reimburse out-of-network providers,
the plan or issuer would still be required to report the allowed amount
paid to the out-of-network provider. The Departments will address,
through the technical implementation guidance, how a plan or issuer
will be able to represent data in the Allowed Amount File, as
necessary. The Departments anticipate that plans and issuers that
reimburse providers using reference-based pricing without a network
will have larger than average Allowed Amount Files, as all of the
payments would be made to out-of-network providers and would therefore
be subject to this requirement.
Some commenters supported disclosure of the ``historical'' payments
made by plans and issuers to out-of-network providers. One commenter
acknowledged that bulk de-identified data that informs a consumer of
historical out-of-network allowed
[[Page 72230]]
amounts may be relevant to consumer decision-making regarding a
particular provider or procedure. One commenter pointed out that if the
Departments failed to adopt this requirement in tandem with the In-
network Rate File requirement, providers could withdraw from networks
to avoid transparency requirements.
By contrast, other comments were less supportive of the Allowed
Amount File proposal. Several commenters stated that publishing
historical out-of-network allowed amounts would not meet the
Departments' purported goal of helping consumers understand costs and
would possibly lead to consumer confusion. Commenters expressed concern
that the Allowed Amount File could result in consumers receiving
misleading information, which would lead to negative financial
consequences for consumers because the file would not provide all
information about potential out-of-network costs, such as those that
could be incurred through balance billing, if allowed in their state.
One commenter stated that inclusion of billed charges would allow the
development of open source charge schedules. One commenter pointed out
that the information in the machine-readable files would not address
scenarios where a participant, beneficiary, or enrollee receives out-
of-network care in an in-network facility. Still other commenters
expressed concerns about the reliability of the data as historical
allowed amounts with out-of-network providers may not provide an
accurate portrait of future cost information because issuers do not
have contracts with out-of-network providers. Similarly, another
commenter stated that health plans should not be responsible for
publishing rates for providers with whom they do not maintain a
relationship.
One commenter recommended the Departments withdraw the proposal,
making the argument that small health plans are unlikely to have a
sufficient number of claims billed for any one procedure from a
particular provider to make the file meaningful. In lieu of requiring
the Allowed Amount File, another commenter suggested the Departments
instead place the onus on out-of-network providers or suppliers to
provide consumers with information about the costs of their services.
The Departments continue to be of the view that release of this
information is appropriate and necessary to empower consumers to make
informed decisions about their health care, spur competition in health
care markets, and to slow or potentially reverse the rising cost of
health care items and services. As noted earlier in this preamble and
in the preamble to the proposed rules, limiting access to data to a
subset of consumers would not promote the transparency goals of PPACA
and the final rules, and would reduce the potential for the final rules
to drive down health care costs by increasing competition. If the
Departments were to eliminate the Allowed Amount File requirement or
reduce its scope, it would significantly reduce the benefits of the
final rules for uninsured consumers and insured consumers evaluating
out-of-network treatment options.
The information in the Allowed Amount File, especially as filtered
through innovative platforms and tools, will help consumers make more
informed decisions regarding changes to their health coverage (for
example, the purchase of new coverage or switching to a new plan).
Furthermore, this information may help insured consumers make more
informed health care decisions when seeking out-of-network treatment;
and may help uninsured consumers make health care decisions and
potentially allow them to negotiate more effectively with providers.
Finally, the creation of Allowed Amount Files may help researchers and
regulators monitor plan benefit design and help spur innovation.
While there is some potential for some consumers to be confused by
the information in the Allowed Amount Files, the Departments do not
agree that the files will provide misleading information to consumers.
The Departments expect most consumers to access this information
through tools created by third-party application developers and other
stakeholders, which will be able to provide additional context for the
average consumer.
The Departments proposed to require plans and issuers to report
out-of-network allowed amounts for services furnished at least 90 days
in the past to help ensure the availability of reasonable volumes of
out-of-network allowed amount data in the Allowed Amount File. The
Departments expressed the view that a 90-day lag between the end of a
reporting period and the publication of required out-of-network allowed
amount data will allow plans and issuers sufficient time to adjudicate
and pay claims from out-of-network providers for the relevant reporting
period. Claims processing times may vary between plans and issuers, and
external factors may increase processing timelines. For example, the
Departments noted in the proposed rules that many out-of-network
providers do not send claims directly to plans and issuers but instead
require participant, beneficiary, or enrollee to file out-of-network
claims. This could mean that an out-of-network claim may not reach a
plan or issuer for 6 to 12 months after a service is rendered. Such
delays could negatively affect the volume of out-of-network allowed
amount data and the ultimate usefulness of this data. For this reason,
the Departments sought comment regarding whether requiring plans and
issuers to report out-of-network allowed amounts for items and services
furnished at least 90 days in the past is sufficient to ensure the
proposed disclosures will yield sufficient volumes of historical data
to be useful to consumers who wish to shop for services based on price.
The Departments requested comment on whether there should be more time
between the end of the reporting period and publication of the data,
such as 120 days, 180 days, or longer, which would increase the
likelihood that out-of-network claims from the relevant reporting
period have been adjudicated and paid by the time of publication.
The Departments did not receive comments directly in response to
this comment solicitation and are finalizing the Allowed Amount File
historical lookback period as proposed. The final rules, therefore,
adopt a requirement for the Allowed Amount Files to include data for
the 90-day period beginning 180 days before the file publication date.
For example, a file published on June 30, 2021, should include data for
a 90-day period beginning on January 1, 2021. The Departments will
monitor the implementation of this requirement for the Allowed Amount
Files and may revisit the lookback period if the 90-day reporting
period beginning 180 days before file publication fails to yield
sufficient out-of-network data on allowed amounts.
The Departments specifically sought comment on whether the required
disclosures of historical out-of-network allowed amounts would provide
useful information that can assist consumers in locating services at an
affordable cost, or whether there could be additional information that
would be both useful to anticipated users and practical for plans and
issuers to disclose for this purpose. For instance, the Departments
stated in the preamble to the proposed rules that the Departments
considered requiring plans and issuers to disclose amounts out-of-
network providers have charged participants, beneficiaries, and
enrollees for covered services in the Allowed Amount File. The
Departments noted they understood that such charged amounts would be
included in any
[[Page 72231]]
claim for out-of-network benefits and could be helpful to consumers
shopping for services based on price. The Departments sought comment on
this data element.
As summarized earlier in this preamble regarding the In-network
Rate File, some commenters who supported the inclusion of non-
negotiated billed charges in the In-network Rate File also supported
inclusion of billed charges in the Allowed Amount File. These
commenters noted that billed charge information would be especially
useful for the uninsured or those seeking out-of-network care. Another
commenter agreed that information on provider-billed charges is
important for transparency, but this commenter stated that providers,
not issuers, would be the appropriate source for this information.
Regarding these comments, the Departments agree that that a billed
charges data element is important to ensure that the public disclosures
required through the out-of-network Allowed Amount File are as useful
to consumers as possible, including in the scenario where an insured
consumer receives items or services from an out-of-network provider.
Although the Departments are aware that the amount an out-of-network
provider will ultimately balance bill (if allowed in their state) a
consumer for an item or service does not always equal the difference
between the billed charge and the allowed amount, the Departments are
of the view that this information would aid consumers in understanding
their potential out-of-pocket liability. In the jurisdictions that do
not prohibit or limit balance billing, information on billed charges
could aide consumers in their health care decision-making as it is
possible that consumers may choose to receive or forgo a particular
item or service from a particular provider based on the additional out-
of-pocket liability they could be expected to pay through a balance
billing charge from a provider.
Consumers may be able to shop for a particular out-of-network
provider based on total cost of an item or service. For example, in a
state that allows providers to balance bill, a consumer has a
coinsurance of 40 percent for Service X when Service X is furnished by
an out-of-network provider. Out of network Provider A's billed charge
for Service X is $200, and the consumer's plan allows an amount of $100
to be paid to the provider. Therefore, the consumer is responsible for
a coinsurance amount of $40 ($100 allowed amount multiplied by the
consumer's 40 percent coinsurance) and the consumer may be balance
billed an additional $100 ($200 billed charge minus the $100 allowed
amount). In comparison, out-of-network Provider B's billed charge for
Service X is $120 and the consumer's plan allows the same amount of
$100 to be paid to the provider. If the consumer receives Service X
from Provider B, they will be responsible for the same coinsurance
amount of $40 ($100 allowed amount multiplied by the consumer's 40
percent coinsurance). However, if the consumer receives Service X from
Provider B, the consumer may only be balance billed $20 ($120 billed
charge minus $100 allowed amount), which would be an $80 savings to the
consumer compared with receiving the Service X from Provider A. Note
that this example assumes that both Provider A and Provider B will
balance bill consumers, which is not always true even in states that
allow balance billing. Consumers should also contact providers to
inquire whether they will balance bill before making health care
purchasing decisions using this information. Therefore, with
information on both allowed amounts and billed charges, the consumer
may choose to receive Service X from Provider B because their total
out-of-pocket costs will likely be lower.
The Departments note that it is possible that plans and issuers
will populate the Allowed Amount File with multiple billed charges for
the same item or service furnished by the same out-of-network provider.
If this is the case, the billed charge in the Allowed Amount File will
present an expected range and give consumers access to a reasonably
accurate estimate of how much they can expect to be balance billed by
an out-of-network provider, but the billed charge cannot provide to the
consumer the exact amount they can expect to be balance billed when
receiving items and services furnished by the out-of-network provider.
For these reasons, the Departments are of the view that inclusion
of the billed charges in the Allowed Amounts File will help provide a
more complete picture of the full amount a provider could receive for a
particular item or service, either from plans and issuers or directly
from a participant, beneficiary, or enrollee. Furthermore, the
Departments are of the view that requiring this information is
consistent with the goal of providing consumers an understanding of
their potential out-of-pocket liability in advance, similar to an EOB
provided in advance, as billed charges are included on a participant's,
beneficiary's, or enrollee's EOB and are often the first data available
for understanding a participants, beneficiary's, or enrollee's out-of-
pocket liability.
The Departments are aware that plans and issuers have information
regarding providers' billed charges, even if they do not necessarily
have information regarding specific balance billing amounts. The
Departments are therefore of the view that the inclusion of billed
charges in the Allowed Amount File will not substantially increase the
burdens of the final rules. Nonetheless, the Departments are aware that
adding billed charges will also increase both the size and complexity
of the Allowed Amounts File. The Departments do not intend to increase
the burden of developing and maintaining these files unless the
inclusion of the additional data element is essential for providing
meaningful pricing information to consumers. Because it is the
Departments' view that this data element will increase transparency of
actual prices paid by participants, beneficiaries, enrollees, and
payers, the Departments are finalizing the Allowed Amounts File with
the modification to add billed charges as an additional data point
required to be disclosed through the file.
The final rules define billed charges as total charges for an item
or service billed to a plan or issuer by a provider. Plans and issuers
are required to publicly disclose billed charges associated with each
unique allowed amount that would be required under the final rules. The
final rules further clarify that plans and issuers must report each
unique combination of allowed amounts and billed charges for each out-
of-network provider, and their associated Place of Service Code,
provider NPI, and provider TIN. For example, an out-of-network provider
(under a single NPI, TIN, and Place of Service Code) submits 25 claims
(or any other number of claims to meet the 20 unique claim threshold
requirement discussed in more detail later in this preamble) to a plan
or issuer for the service Y. The 25 claims have three \179\ different
billed charges ($100, $150 and $200) and two different allowed amounts
($50 and $150) for item Y. The plan or issuer should have one entry
that represents each unique combination of billed charges and allowed
amounts submitted by the out-of-network provider. Therefore, in this
example, the Departments would expect
[[Page 72232]]
the plan or issuer to represent in the Allowed Amounts File no fewer
than three unique entries, and no more than six unique entries for item
Y from this out-of-network provider. For example:
---------------------------------------------------------------------------
\179\ The Departments note that it is possible for a provider to
have different allowed amounts for the same item or service covered
by the same out-of-network provider because the plan or issuer does
not have a contractual relationship with that out-of-network
provider, by definition. For similar reasons, it is also possible
for the billed charged submitted by the same out-of-network provider
to for the same item or service to be variable.
---------------------------------------------------------------------------
Entry A has a billed charge of $100 and an associated
allowed amount of $50;
Entry B has a billed charge of $150 and an associated
allowed amount of $50;
Entry C has a billed charge of $200 and an associated
allowed amount of $50;
Entry D has a billed charge of $100 and an associated
allowed amount of $150;
Entry E has a billed charge of $150 and an associate
allowed amount of $150;
Entry F has a billed charge of $200 and an associated
allowed amount of $150.
The Departments do not expect to see 25 different entries, unless
they represented 25 distinct combinations of billed charges and
associated allowed amounts from the out-out network provider for Item
Y.
In the Allowed Amount File, the file structure is envisioned as a
parent/child data relationship, where certain data elements are
included under or belong to other data elements, as a child to a
parent. In the Allowed Amount File, the billed charge data element
would serve as a child to the parent allowed amount element. Therefore,
under each unique allowed amount for a particular item or service from
a particular provider, the amount of each provider-billed charge is
listed as a unique dollar amount.
One commenter requested the Departments clarify what is meant by
``allowed amounts for covered items or services furnished by particular
out-of-network providers,'' questioning whether through inclusion of
the word ``particular'' the Departments intended to reference
specialized out-of-network providers upon which plans and issuers might
place coverage limitations. The Departments clarify that inclusion of
the word ``particular'' as a modifier of ``out-of-network providers''
was not intended to be a reference to specialized out-of-network
providers upon which plans and issuers might place coverage
limitations. Rather, use of the word ``particular'' indicates that
Allowed Amount Files must include the historical allowed amounts for
covered items and services furnished to each out-of-network provider to
whom such payments were made during the reference period. The
Departments clarify that under the final rules, and as contemplated in
the proposed rules, plans and issuers are expected to include
historical allowed amounts for every covered item or service furnished
by each out-of-network provider so long as the unique claims threshold
for the out-of-network provider is met.
The Departments further clarify that plans and issuers are only
required to include in the Allowed Amount File those covered items and
services furnished by an out-of-network provider for which the plan or
issuer has adjudicated claims and determined it will pay an allowed
amount. If the plan or issuer has not adjudicated claims and determined
it will pay an allowed amount for items or services furnished by an
out-of-network provider, the plan or issuer is not required to include
those allowed amounts or billed charges in the Allowed Amount File.
In response to the comment that the information in the files would
not address the scenario where a participant, beneficiary, or enrollee
receives out-of-network care in an in-network facility, the Departments
clarify that the expectation is that this information would be captured
in the Allowed Amounts File. If a participant, beneficiary, or enrollee
receives out-of-network care, even if the facility is in the
participant's, beneficiary's, or enrollee's network, the provider will
generate a claim and send a billed charge to the payer that will
establish an allowed amount for the claim; the Departments expect this
allowed amount to appear in the Allowed Amounts File in this scenario.
As noted elsewhere in this preamble, the Departments will provide
technical implementation guidance (as well as individualized technical
assistance, as needed) to ensure that plans and issuers are able to
make public the disclosures required through the final rules.
The Departments do not agree with the commenter who asserted that,
because some small health plans will not have a sufficient number of
any one procedure from a particular provider to make the file
meaningful, the Allowed Amount File requirement should be withdrawn.
The relevant commenter did not provide a number of claims that it
believed would make the file meaningful. In contrast, the Departments
are of the view that the files will be meaningful to the public
regarding all covered items and services from a particular provider
regardless of the specific numbers of claims at issue, even if a
particular provider bills relatively few claims to a particular plan or
issuer. As discussed elsewhere in this preamble, for privacy and
security reasons, the Departments are requiring disclosure for all
covered items and services from a particular provider that meets the
unique claims threshold established by the final rules. If a small
health plan does not have sufficient claims for a covered item or
service to meet the unique claims threshold for a particular provider,
then that health plan is not permitted to publicly disclose information
for that particular item or service paid to the particular provider.
The Departments are of the view that most health plans and issuers will
meet the unique claims threshold for a large proportion of items,
services, and providers to make the files sufficiently meaningful to
justify this requirement.
In the preamble to the proposed rules, the Departments noted that
providing this information could raise health privacy concerns. The
Departments are committed to protecting PHI and other sensitive
information. To address these privacy concerns, as discussed in this
preamble, the Departments proposed that plans and issuers would not be
required to provide out-of-network allowed amount data in relation to a
particular provider and a particular item or service when compliance
would require a plan or issuer to report out-of-network allowed amounts
to a particular provider in connection with fewer than 10 different
claims for payment. The Departments also noted that disclosure of such
information would not be required if compliance would violate
applicable health information privacy laws. In addition to proposing
this exemption, the Departments proposed to require plans and issuers
to include only unique out-of-network allowed amounts to mask the total
episodes of care for a particular provider and item or service. In the
proposed rules, the Departments expressed the view that these
mitigation strategies, in addition to flexibilities proposed to allow
the aggregation of reported data (as described later in this preamble),
were sufficient to protect patients from identification based on
information in the Allowed Amount File. The Departments solicited
comment on whether additional privacy protections would be required.
The Departments specifically requested comment on whether a higher
minimum claims threshold, such as a threshold of 20 claims, would
better mitigate privacy concerns and minimize complexity in complying
with Federal or state privacy laws without compromising the integrity
of the compiled information. The Departments also sought comment on
additional approaches that could decrease the potential for aggregated
health information that would be disclosed under the proposed rules to
be
[[Page 72233]]
identified, especially with respect to smaller group health plans.
In response, some commenters expressed concerns about maintaining
HIPAA protections on the Allowed Amount File due to the small number of
claims associated with specific services for out-of-network providers.
Several commenters stated the threshold of 10 unique claims to require
public disclosure of unique historical allowed amounts would be too low
to protect consumers' PHI. One commenter requested that the Departments
clarify how they arrived at the 10 claims threshold. Some commenters
recommended different minimum thresholds. Some commenters recommended a
minimum threshold of 50 claims. On the other hand, other commenters did
not support increasing the threshold, noting that the files do not
contain identifiable data and so would not pose a risk. One commenter
stated that the files should be released including the lowest number of
claims necessary to achieve the goal of protecting participant,
beneficiary, and enrollee privacy and recommended keeping the proposed
threshold of 10 claims. Another commenter requested that the
Departments not make the threshold any higher, and even consider
lowering the cutoff to five claims, to maintain access to price
transparency data for rural Americans.
Based upon comments received the final rules adopt a 20 unique
claim threshold. The Departments are of the view that the 20 unique
claim threshold balances the concerns expressed by commenters who
suggested the Departments increase the threshold to 50 claims with the
concerns of commenters who expressed the opinion that the proposed 10
claim threshold (or an even lower threshold) would be sufficient to
ensure the files include a meaningful amount of data. The Departments
are of the view that 20 unique claims are sufficient to balance the
privacy concerns against the needs for transparency through the Allowed
Amounts File. This 20 unique claim threshold is more stringent than
CMS' cell size suppression policy, which requires cells containing
values of 1 through 10 to be suppressed in CMS data sets.\180\
Increasing the unique claim threshold from 10 to 20 claims will not
significantly reduce the amount of data that are required to be made
public through the Allowed Amount File. However, if the Departments
were to increase the unique claim threshold to 50 claims, as suggested
by some commenters, the Departments are concerned that this could
significantly reduce the amount of data that are required to be made
public through the Allowed Amount File, which could undermine the goal
of price transparency.
---------------------------------------------------------------------------
\180\ The CMS Cell Size Suppression Policy is outlined on the
CMS website at the following location: https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
---------------------------------------------------------------------------
The Departments are of the view that increasing the unique claim
threshold from 10 to 20 claims will better balance the policy goal of
maximum transparency with the need to protect participants,
beneficiaries, and enrollees from the possibility of being re-
identified through the data included in the Allowed Amount File. In
addition to this strategy, the Departments expect that the flexibility
discussed later in this preamble under the special rule to permit
aggregation of reported data will help protect participants,
beneficiaries, and enrollees from identification based on information
in the Allowed Amount File. Finally, the Departments reiterate that the
disclosure of the information is not required if disclosure would
violate applicable health information privacy laws. The Departments
note that this exception does not mean that these disclosures are not
required where a law that would otherwise prohibit the disclosure
permits disclosure if required by law.
Prescription Drug File
The Departments finalize negotiated rates for prescription drugs as
the third content element in the Prescription Drug File. The
Departments received several comments related to whether negotiated
rates for prescription drugs should be disclosed through the machine-
readable files, and if so, which price or prices related to
prescription drugs should be required to be included. Many commenters
provided general support for the public release of negotiated rates for
prescription drugs. One commenter asserted that releasing negotiated
rates for prescription drugs would result in lower costs for health
plans and consumers, which could lead to a reduction in manufacturer
discounts of upwards of three percent.
Several commenters did not support disclosure of negotiated rates
for prescription drug prices through the machine-readable files.
Commenters recommended that the In-network Rate File should not include
prescription drugs for several reasons. These reasons include: The
complexity of prescription drug pricing (prices are determined by a
formula that is determined at the point-of-sale and can change on a
daily basis; the information would not be relevant to consumer
decision-making; and the existence of established drug pricing tools
that provide support for consumer decision-making. Some commenters
stated that the unique nature of prescription drug pricing would make
the release of negotiated rates difficult and further noted that the
rates negotiated between PBMs and pharmacies are considered
confidential. Another commenter stated that the Departments should only
require disclosure of prescription drug prices when the information
disclosed is directly related to the cost a plan participant,
beneficiary, or enrollee would need to pay out of pocket so as not to
undermine group health plans' and health insurance issuers' ability to
negotiate lower drug costs. Some commenters claimed that plans and
issuers have no control over prescription drug costs and may not be
able to provide this information. Instead, commenters asserted that
information related to prescription drug costs should come from PBMs or
prescription drug manufacturers.
In 2018, retail prescription drug spending represented
approximately nine percent ($335 billion) of overall health
spending.\181\ In 2017 large group health plans and issuers accounted
for the largest share of prescription drug spending amongst other
payers, despite generally having a younger and healthier population
than public payers.\182\ The Departments maintain that plans and
issuers have an essential role,\183\ and vested interest in controlling
prescription drug spending. Moreover, as prescription spending
continues to rise,\184\ so does the trend of prescription rebates.\185\
According to
[[Page 72234]]
surveyed health plan and PBM personnel, PBMs passed through 78 percent
of manufacturer rebates to health plans in 2012 and 91 percent in
2016.\186\ And while some plans and issuers may use these rebates to
dampen premium increases,\187\ there remains an unclear prescription
drug supply chain that masks the true costs of prescription drugs. The
Departments are of the view that it would not advance the goals of the
final rules to exclude a category of items and services that comprises
such a significant proportion of health care spending.
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\181\ ``National Health Expenditures 2018 Highlights.'' Centers
for Medicare & Medicaid Services. Available at: https://www.cms.gov/files/document/highlights.pdf.
\182\ Cubanski, J., and Rae, M. ``How Does Prescription Drug
Spending and Use Compare Across Large Employer Plans, Medicare Part
D, and Medicaid?'' Kaiser Family Foundation. May 20, 2019. Available
at: https://www.kff.org/medicare/issue-brief/how-does-prescription-drug-spending-and-use-compare-across-large-employer-plans-medicare-part-d-and-medicaid/.
\183\ ``How are prescription drug prices determined?'' American
Medical Association. April 9, 2019. Available at: https://www.ama-assn.org/delivering-care/public-health/how-are-prescription-drug-prices-determined.
\184\ ``National Health Expenditure Projections 2019-28.''
Office of the Actuary. Centers for Medicare & Medicaid Services.
March 24, 2020. Available at: https://www.cms.gov/files/document/national-health-expenditure-projections-2019-28.pdf.
\185\ According to the Academy of Managed Care Pharmacy, a
prescription drug rebate is a monetary amount returned to a payer
from a prescription drug manufacturer based on pharmaceutical use by
a covered person or purchases by a provider. ``AMCP Guide to
Pharmaceutical Payment Methods, 2013 Update.'' Available at: https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf; see also ``The Prescription Drug Landscape,
Explore.'' PEW Charitable Trusts. March 8, 2019. Available at:
https://www.pewtrusts.org/en/research-and-analysis/reports/2019/03/08/the-prescription-drug-landscape-explored.
\186\ Id.
\187\ Id.
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The Departments agree that prescription drug pricing is complex but
are of the view that complexity is not a valid reason for inaction.
There are many different players in the prescription drug supply chain
that may have some control over costs, including plans and issuers,
manufacturers, wholesalers, pharmacies, and PBMs.\188\ As commenters
stated, it is often the case that PBMs negotiate the price of a
prescription drug for a plan or issuer based on a contract the plan or
issuer maintains with the PBM; however, it is ultimately the plan or
issuer who is responsible for deciding how the costs of prescription
drugs are passed along to a participant, beneficiary, or enrollee. The
Departments, therefore, are of the view that plans and issuers are
aware of the negotiated rate for a prescription drug for which their
participants, beneficiaries, or enrollees may have cost-sharing
liability, or can be informed of this negotiated rate by their
contracted PBM.
---------------------------------------------------------------------------
\188\ ``How are prescription drug costs really determined?''
Biotechnology Innovation Organization. Available at: https://www.drugcostfacts.org/prescription-drug-costs.
---------------------------------------------------------------------------
The Departments do not agree that prescription drug pricing
information, such as negotiated rates, will confuse consumers. As
discussed elsewhere in this preamble, the Departments recognize that
the information included in the machine-readable files may not be easy
for an average consumer to navigate and expect that third-party
developers will use this information to make tools available that make
this information more useful for the average consumer.
The Departments agree with commenters who acknowledged the
existence of many tools that provide prescription drug prices. However,
the Departments are of the view that existing prescription drug pricing
tools are insufficient as they lack competitive pricing information
across all PBMs, and health plans and issuers.\189\ Once prescription
drug pricing is made more fully available, health care providers will
have greater opportunity to factor pricing information into their
prescribing decisions. Many health care providers benefit financially
when they can reduce costs and improve their patients' medication
adherence.\190\ This benefit to providers can also have a significant
impact on overall health care spending.
---------------------------------------------------------------------------
\189\ Galewitz, P. ``Doctors Slow To Adopt Tech Tools That Might
Save Patients Money On Drugs.'' NPR. July 5, 2019. Available at:
https://www.npr.org/sections/health-shots/2019/07/05/738283044/doctors-slow-to-adopt-tech-tools-that-might-save-patients-money-on-drugs.
\190\ Id.
---------------------------------------------------------------------------
For these reasons, and those discussed more fully below, the
Departments are finalizing, with modifications from the proposed rules,
requirements to disclose pricing information for prescription drugs
through a machine-readable file. However, reflecting the unique
attributes of prescription drug pricing, the final rules respond to
comments by adopting requirements that are more detailed than what was
included in the proposed rules, including the inclusion of a third
machine-readable file for prescription drug pricing information.
The final rules require plans and issuers to produce a third
machine-readable file for reporting prescription drug pricing
information, the Prescription Drug File, whereas the proposed rules
would have required plans and issuers to include negotiated rates for
covered prescription drugs in the In-network Rate File. The Departments
have made this change to ensure that prescription drug pricing
information is produced in a manner that is most useful to the public.
As noted earlier in this preamble, there are upwards of 100,000 NDCs
for prescription drugs. Divorcing negotiated rates for prescription
drugs from negotiated rates for other items and services allows the
pricing information for medical items and services to be discernible
from pricing information for prescription drugs. Further, a PBM may
administer pharmacy benefits for a plan or issuer in addition to any
other services it may provide to a plan or issuer. Therefore, keeping
prescription drugs pricing data separate from pricing data for other
items and services is generally better aligned with plan and issuer
operations and will reduce the burden associated with combining data
from different sources. As discussed in the Information Collection
Requests (ICR) section of this preamble, the Departments estimate that
the Prescription Drugs File requirement will not add significantly to
the development and maintenance costs of the machine-readable files
because the cost and burdens related to prescription drugs will largely
be transferred from the In-network Rate File to the Prescription Drug
File. Additionally, the Departments anticipate that removal of
prescription drugs from the In-network Rate Files will significantly
reduce the size of those files, which could reduce the costs associated
with maintenance and storage of each individual file. The Departments
are of the view that removing prescription drugs from the In-network
Rate File and requiring this information to be included in a separate
Prescription Drug File is consistent with the Departments' goal of
separating fundamentally different types of data into distinct files.
Because, as many commenters observed, prescription drug prices are
unique, the Departments are of the view that this information would be
more appropriately represented through a third machine-readable file.
Furthermore, the updated machine-readable file structure will support
consumers, researchers, and third-party developers in reviewing,
ingesting, aggregating, and analyzing the data.
The Disclosure of Prescription Drugs Pricing Information
Under the proposed rules, group health plans and health insurance
issuers would be required to publicly disclose negotiated rates in the
In-network Rate file. The Departments defined negotiated rates in the
proposed rule as the amount a group health plan or health insurance
issuer, or a third party on behalf of a group health plan or health
insurance issuer, has contractually agreed to pay an in-network
provider for covered items and services, pursuant to the terms of an
agreement between the provider and the group health plan or health
insurance issuer, or a third party on behalf of a group health plan or
health insurance issuer. As discussed in the Definitions section of
this preamble, the final rules adopt this definition as proposed, with
modifications to provide additional clarity.
In the preamble to the proposed rules, the Departments acknowledged
that cost-sharing liability for prescription drugs is often based on an
amount other than the negotiated rate, such as manufacturer list prices
or undiscounted list prices such as AWP or
[[Page 72235]]
WAC. The Departments further acknowledged that, because of the
application of rebates and other discounts, the inclusion of just the
negotiated rate for prescription drugs could mislead consumers because
the rate paid by the plan could ultimately be lower than the price paid
by the consumer at the point-of-sale, as it is the Departments'
understanding that these rebates and other discounts typically are not
passed on to the consumers at the point of sale. The Departments
expressed the concern that including only the negotiated rate for
prescription drugs used to determine cost-sharing liability could
perpetuate the lack of transparency surrounding prescription drug
pricing. To this end, the Departments solicited comment on which
pricing information related to prescription drugs should be
disclosed.\191\
---------------------------------------------------------------------------
\191\ The Departments note that this discussion in the preamble
to the proposed rules occurred in the context of the third content
element (negotiated rates) for the internet-based self-service tool.
However, as negotiated rates were a proposed content element for the
machine-readable files, the Departments are of the view that the
comments received regarding negotiated rates in the context of the
internet-based self-service tool are equally applicable to the
prescription drug disclosures plans and issuers are being required
to make through the machine-readable files. The definition of
``negotiated rate'' for prescription drugs applies to both the
internet-based self-service tool and machine-readable file
provisions. Regarding the machine-readable files, the Departments
proposed that plans and issuers be required to include in-network
negotiated rates and out-of-network allowed amounts for all covered
items and services. In the Departments' view, the use of the same
term regarding both requirements underscores the relevance of these
comments to all disclosure requirements applicable to items and
services, including those applicable to prescription drugs.
Furthermore, several commenters did not clearly separate their
comments regarding the internet-based self-service tool and the
machine-readable files and provided broad comments that applied to
all relevant sections of the proposed rules.
---------------------------------------------------------------------------
Despite the Departments' concerns regarding negotiated rates for
prescription drugs outlined in the preamble to the proposed rules,
commenters responded that negotiated rates, in addition to other
information, are an important data point necessary to achieving useful
transparency into coverage and out-of-pocket costs for prescription
drugs. Several commenters recommended that the machine-readable file
include both the negotiated price and the undiscounted ``list'' price,
upon which coinsurance and deductibles are often based, in order to
promote competition. Other commenters suggested that plans and issuers
should disclose to enrollees when they do not pass through manufacturer
rebates and discounts at the point-of-sale or factor these amounts into
enrollee cost sharing. Another commenter recommended the Departments
consider requiring a ``net price'' for prescription drugs rather than
the negotiated rates. This commenter stated that, it is vital that this
``negotiated rate'' also include the ``net price'' (which accounts for
all price concessions, including direct and indirect remuneration fees
(DIR) and/or similar policies/terminology, such as ``true up''
practices under employer-sponsored and private plans to accurately
estimate participant, beneficiary, and enrollee cost-sharing liability
for prescription drugs). One commenter noted that if the public
disclosure did not include information related to rebates, the file
could be misleading and could lead to a continuing overemphasis on
prescription drug list prices without recognition of the role played by
rebates.
Another commenter recommended that the Departments allow plans and
issuers to report the most appropriate available price type based on
the plan's benefit design. This commenter suggested that plans should
also be required to identify the price reported, such as AWP or WAC or
the contracted pharmacy reimbursement amount (for example, the Part D
negotiated price).
The Departments have closely reviewed the comments to determine the
prescription drug pricing information plans and issuers should provide
in the Prescription Drug File in order to achieve the goals of
transparency. Based on this review, the final rules are adopting as
content element three for the Prescription Drug File a requirement for
plans and issuers to publicly disclose two amounts for prescription
drugs in the Prescription Drug File: The negotiated rate and the
historical net price.
Prescription Drug Negotiated Rate Disclosure
As evidenced by the comments and the Departments' independent
research, there is wide variability in how negotiated rates are
assigned for prescription drugs. For instance, some commenters noted
that negotiated rates for prescription drugs include rebates, price
concessions, and other ``true-ups, while others likened the negotiated
rates to the undiscounted list price used for determining cost-sharing
liability. Therefore, plans and issuers may use varying types of prices
when reimbursing providers for prescription drugs. For example, it is
the Departments' understanding that for generic prescription drugs, the
Maximum Allowable Cost (MAC)--an amount the plan or issuer uses as the
maximum amount they will pay for a particular prescription drug
product--may be the amount that plans and issuers use to pay providers
for a prescription drug. Plans and issuers may reimburse providers for
other prescription drugs using a UCR amount or an amount based on the
undiscounted list price, such as AWP or WAC. It is the Departments'
understanding that contracts negotiated between plans and issuers (or
their contracted PBM) and providers generally do not include specific
negotiated rates for prescription drugs, but instead include formulas
that determine the type of price that will be used to reimburse
providers for a particular prescription drug product. The negotiated
rate may differ by drug or class of drug in the contract as the lesser
of several types of prices based on one of the benchmarks described
above--that is, WAC, AWP, MAC, or UCR. Because prices for prescription
drugs can fluctuate on a daily basis, the price that is used to
reimburse the provider can also fluctuate based on application of the
contract terms.
In addition to better appreciating the wide variability in how
negotiated rates are assigned, the Departments also now understand
based on comments and independent research, that, contrary to the
Departments' understanding as explained in the preamble to the proposed
rule, no matter what benchmark or formula is used to determine the
negotiated rate, the negotiated rate is frequently also the rate upon
which cost-sharing liability is based for prescription drugs.
Based on the circumstances described above, the Departments
therefore agree with commenters that a certain amount of flexibility is
required for plans and issuers as it relates to the benchmarks and
inputs required for the disclosure of negotiated rates for prescription
drugs. To allow for flexibility, as proposed, the final rules do not
assign a benchmark or necessary inputs to the definition of negotiated
rates. The final rules include a broad definition for negotiated rates
to mean the amount a group health plan or health insurance issuer has
contractually agreed to pay an in-network provider, including an in-
network pharmacy or other prescription drug dispenser, for covered
items and services, whether directly or indirectly, including through a
TPA or PBM.
As noted above, the negotiated rate can be one of several different
rates and can fluctuate on a daily basis depending on the terms of the
contract between plans or issuers (or the PBM for the plan or issuer)
and the provider, which
[[Page 72236]]
includes pharmacies and other prescription drug dispensers. Therefore,
the Departments clarify that, where a plan or issuer uses a formula as
described above to determine the rate that will be used to reimburse
providers for a prescription drug, the negotiated rate that should be
included in the Prescription Drug File should be the rate that would be
used by the plan or issuer to reimburse providers on the date that the
file is extracted.
Notably, the final rules do not finalize a requirement to include
the manufacturer list price, as contemplated in the proposed rules. The
manufacturer list price is a manufacturer-specified metric for drug
prices that is commonly used by both Federal and commercial health care
programs as a benchmark for negotiated rates. The manufacturer list
price in this context is often the WAC, which is defined in statute as,
the manufacturer's list price for the drug or biological to wholesalers
or direct purchasers in the United States, not including prompt pay or
other discounts, rebates or reductions in price, for the most recent
month for which the information is available, as reported in wholesale
price guides or other publications of pricing data with respect to a
drug or biological.\192\
---------------------------------------------------------------------------
\192\ 42 U.S.C. 1395w-3a(c)(6).
---------------------------------------------------------------------------
Like negotiated rates, the list price does not include discounts,
dispensing fees, rebates, or other retrospective pricing adjustments.
The manufacturer list price is not plan- or issuer-specific. If the
Departments were to require plans and issuers to include the
manufacturer list price in the Prescription Drug File, the information
included in the files would be the same or similar across all plans and
issuers. Further, manufacturer list price information is already
aggregated, available through several companies, and could be
incorporated into third party applications to be made accessible to
consumers. WAC prices for drugs and biologics are collected and
published by several companies, including First Databank and Medi-Span.
Additionally, CMS publishes a monthly National Average Drug Acquisition
Cost (NADAC), which provides a national benchmark for the prescription
drug prices paid by retail pharmacies.\193\ Because information on
manufacturer list prices would be largely redundant across plans and
issuers, and because this information is publicly available through
other existing resources, the Departments concluded this information
would be of limited value for the public.
---------------------------------------------------------------------------
\193\ ``National Average Drug Acquisition Cost.'' Centers for
Medicare & Medicaid Services. September 15, 2020. Available at:
https://data.medicaid.gov/Drug-Pricing-and-Payment/NADAC-National-Average-Drug-Acquisition-Cost-/a4y5-998d.
---------------------------------------------------------------------------
The Departments do not intend to increase the burden of developing
and maintaining the machine-readable files unless the inclusion of the
additional data element is essential to provide meaningful, transparent
pricing information to the public. Inclusion of the manufacturer list
price would not significantly advance transparency as this information
is already available publicly, and it would increase the burden of
developing the Prescription Drug File. The Departments expect that
third-party developers will access and incorporate publicly available
databases, such as those including manufacturer list pricing
information, where that information is relevant to providing meaningful
information to consumers.
The Departments are of the view that it is important for
transparency for negotiated rates to be included in the Prescription
Drug File. Consumers, both insured and uninsured, can use this
information to better understand the cost of prescription drugs and to
advocate for less expensive alternatives. The Departments are also of
the view that making the negotiated rate public in a manner that is
highly visible to consumers, researchers, innovators and regulators
could potentially place pressure on manufacturers to lower their list
prices, which could, in turn, lower negotiated rates upon which
consumer cost-sharing liability is based.
Nonetheless, as stated in this preamble and in the preamble to the
proposed rules, requiring disclosure of only the negotiated rate for
prescription drugs could perpetuate the lack of transparency
surrounding prescription drug pricing. As commenters noted, the
negotiated rate is not generally tied to the amount a plan or issuer
will ultimately pay for the prescription drug or prescription drug
service due to the use of post-point-of-sale rebates, discounts, and
other price concessions that reduce the price that plans and issuers
pay for prescription drugs. To address this issue and to introduce
greater transparency surrounding prescription drug pricing, in response
to comments, the Departments are also finalizing a requirement that
plans and issuers must publicly disclose historical net prices, as
discussed in detail below.
Prescription Drug Historical Net Price Disclosure
For purposes of the final rules, historical net price means the
retrospective average amount a plan or issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. Net price is the
price for a prescription drug after discounts are deducted, and is paid
at different points in the prescription drug distribution chain (for
example, the plan or issuer to the pharmacy, the pharmacy to a
wholesaler, and the wholesaler to the manufacturer).\194\ For the
purposes of the final rules, the Departments are concerned with the
price ultimately paid by a plan or issuer to a drug manufacturer.\195\
Essentially, rebates, discounts, chargebacks, fees, and other
additional price concessions are adjustments made after the point-of-
sale that affect the total price paid by the plan or issuer (or through
a contract with the PBM) to the manufacturer for a prescription drug
product. As a general matter, a price concession is a discount or
rebate available to a purchaser of a product or service, wherein the
discount or rebate is conditioned upon the purchaser complying with the
contractual terms of the rebate or discount offer.\196\ More
specifically, a rebate is an amount that the prescription drug
manufacturer returns to a payer based on utilization by consumers
enrolled through a plan or issuer or based on purchases by a
provider.\197\ A chargeback is a type of discount process through a
prescription drug wholesaler where manufactures reimburse wholesalers
who offer drugs to purchasers at discounted prices, and the discount
negotiation occurs between the manufacturer and the purchaser.\198\
Finally, fees include any payment adjustments, incentives, or other
discounts that are not included in the negotiated price for a drug (for
example, prompt pay discounts, pharmacy network fees, performance-based
fees, and incentive fees).\199\ The Departments
[[Page 72237]]
note that manufacturers also may offer additional price concessions to
certain providers or directly to consumers in the form of coupons. The
final rules only require disclosure of reasonably allocated rebates,
discounts, chargebacks, fees, and any additional price concessions
received by the plan or issuer (or the PBM under contract with the plan
or issuer).
---------------------------------------------------------------------------
\194\ ``AMCP Guide to Pharmaceutical Payment Methods, 2013
Update'' Academy of Managed Care Pharmacy. 2013. Available at:
https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf.
\195\ The Departments note that each plan or issuer (or the PBM
acting under contract with the plan or issuer) may utilize a
different combination of price concessions.
\196\ ``AMCP Guide to Pharmaceutical Payment Methods, 2013
Update. Academy of Managed Care Pharmacy. 2013. Available at:
https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf.
\197\ Id.
\198\ Id.
\199\ ``Final Medicare Part D DIR Reporting Requirements for
2017.'' Centers for Medicare & Medicaid Services. Available at:
https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Weekly-Items/SysHPMS-Memo-2018-May-30th.
---------------------------------------------------------------------------
As noted earlier, several commenters commented on the nature of the
prescription drug pricing information that should be captured to
achieve the goals of price transparency. Some commenters noted the net
price would be important to price transparency efforts because it would
put consumers on notice when the net price is less than their cost-
sharing amount and it would capture the actual prices of prescription
drugs after the application of price concessions, which would provide
transparency regarding actual prescription drug costs. The Departments
agree with these commenters that disclosure of information about the
net price for prescription drugs (and therefore rebates and other price
concessions that are included in the net price) is necessary to achieve
the goals of the final rules.
Therefore, the final rules adopt a requirement to make public a
historical net price, as defined by the final rules. Furthermore,
rather than require disclosure of the actual net price, the final rules
establish and adopt a definition of historical net price that balances
the need for transparency against concerns expressed by other
commenters that release of net prices could affect issuers and PBMs'
ability to negotiate drug prices, including rebates and other price
concessions. Specifically, the final rules define historical net price
as the retrospective average amount a plan or issuer paid an in-network
provider, including any in-network pharmacy or other prescription drug
dispenser, for a prescription drug, inclusive of any reasonably
allocated rebates, discounts, chargebacks, fees, and any additional
price concessions received by the plan or issuer with respect to the
prescription drug or prescription drug service. The Departments note
that for the purposes of the final rules, the definition of historical
net price only includes those price concessions received by the plan or
issuer (or under the contract between the PBM and the plan or issuer).
Because of timing delays related to application of rebates, discounts,
chargebacks, fees, and other price concessions, plans and issuers are
required to provide historical or retrospective data, rather than
prospective or current pricing data regarding the net price of
prescription drugs. In the case prescription drug net prices,
historical data will provide valuable information for stakeholders, as
the actual prices plans and issuers ultimately pay for prescription
drugs cannot be known until after the application of time-delayed
rebates, discounts, chargebacks, fees, and other price concessions. As
discussed later in this section, plans and issuers will be required to
include historical net prices for a 90-day period beginning 180 days
before the date a particular Prescription Drug File is published. The
final rules also require the historical net price, as defined earlier
in this section, to be disclosed through the Prescription Drug File.
As discussed earlier in this preamble, the Departments are aware
that an estimated allocation of rebates, discounts, chargebacks, fees,
and any other additional price concessions may be necessary to
represent the historical net price. Product-specific and non-product
specific rebates, discounts, chargebacks, fees, and other price
concessions must be allocated by dollar value if the total amount of
the price concession is known to the plan or issuer at the time of file
publication. It is the Departments' understanding that most discounts,
such as those related to market sharing and rebates based on volume,
are calculated within time periods as short as one to three months.
Therefore, the Departments expect the total amounts for these types of
discounts, rebates, and other price concessions will be known at the
time of file publication. Where the total amount of a price concession
is known at the time of file publication, plans and issuers must
allocate the price concession by the total dollar amount.
The Departments also understand that some product-specific and non-
product specific price concessions are based upon outcomes- or value-
based payment arrangements that calculate rebates over a longer period
of time--usually six months to more than three years. Because these
price concessions will not be known at the time of file publication,
the Departments are requiring plans and issuers to estimate the
historical net price using a reasonable allocation and good faith
estimate of the total concession amount. Therefore, if the total amount
of the price concession is not known to the plan or issuer at the time
of file publication, then rebates, discounts, chargebacks, fees, and
other price concessions should be reasonably allocated using an
estimate of the average price concessions based on the rebates,
discounts, chargebacks, fees, and other price concessions received over
a time period prior to the current reporting period and of equal
duration to the current reporting period.
Rebates may reflect discounts negotiated with drug manufacturers
that lower drug prices for the plan or issuer. Rebates may not directly
benefit participants, beneficiaries, or enrollees, however, as the
decision of whether and how to share savings from rebates is at the
discretion of the plan or issuer. Nonetheless, there is evidence that
rebates are positively correlated with increased manufacturer list
prices for prescription drugs, which is typically the basis for a
consumer's cost-sharing liability.\200\ A recent analysis found that,
on average, from 2015 to 2018, a $1 increase in rebates was associated
with a $1.17 increase in manufacturer list prices.\201\ Therefore, due
to the positive correlation between rebates and manufacturer list
prices, a policy that results in a reduction to rebates may result in a
reduction in the manufacturer list price (and also overall prescription
drug prices). A policy that requires plans and issuers to make public
historical net prices could expose the extent of rebates and other
price concessions, and this transparency in historical net price could
cause a reduction in the use of rebates and other price concessions,
and, therefore, a reduction in the manufacturer list price.\202\ The
resulting reductions in manufacturer list price could lead to lowered
out-of-pocket costs for both uninsured consumers who must pay the
manufacturer list price and insured consumers with deductibles and
coinsurance. Because negotiated rates for prescription drugs are
largely based upon the manufacturer list price, the reduction in the
manufacturer list price will likely be reflected in the negotiated
rate. Further, because negotiated rates are used to determine cost-
sharing liability for prescription drugs, a reduction in such rates
will likely result in lower consumer costs through a reduction to
deductibles and coinsurance.
---------------------------------------------------------------------------
\200\ Sood, N., et al. ``The Association Between Drug Rebates
and List Prices.'' U.S.C. Schaeffer Center for Health Policy and
Economics. February 11, 2020. Available at: https://healthpolicy.usc.edu/research/the-association-between-drug-rebates-and-list-prices/.
\201\ Id.
\202\ Id.
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The Departments are of the view that requiring both the negotiated
rate and the historical net price, as defined by the final rules, will
produce sufficient transparency regarding prescription drug pricing
information to support consumer health care purchasing
[[Page 72238]]
decisions and provide other stakeholders insight into actual
prescription drug pricing. Inclusion of both the negotiated rate and
historical net price addresses the Departments' concern, expressed in
the preamble to the proposed rules, that merely requiring disclosure of
the rate that is used to determine an individual's cost-sharing
liability (that is, as clarified in the final rules, the negotiated
rate) could perpetuate the lack of transparency in prescription drug
pricing.
Additionally, in the preamble to the proposed rules, the
Departments specifically solicited comment on whether and how the
public disclosure requirements should account for rebates, discounts,
and dispensing fees to ensure individuals have access to meaningful
cost-sharing liability estimates for prescription drugs.\203\ Upon
review of the comments, the Departments are of the view that public
disclosure of the historical net price, which takes into account
rebates, discounts, dispensing fees, and other price concessions, in
addition to the negotiated rate, upon which cost sharing is based,
provides the appropriate combination of pricing information to achieve
the goals of transparency and ensure that individuals have access to
meaningful prescription drug pricing information. First, the negotiated
rate will help support consumer health care purchasing decisions.
Second, the historical net price will support the public in gaining
enhanced knowledge of actual drug prices. Enhanced knowledge of actual
drug historical net prices could also support consumer health care
purchasing decisions, as consumers could use the information to
determine whether their out-of-pocket costs are commensurate with the
rebates, discounts, and other price concessions received by their plan
or issuer. The historical net price will also make consumers and other
stakeholders aware of situations where cost-sharing liability for a
prescription drug exceeds the amount their plan or issuer ultimately
paid for the prescription drug. In these situations, participants,
beneficiaries, and enrollees will be able to make an informed decision
regarding whether to utilize their plan or coverage when purchasing the
prescription drug. Furthermore, plans and issuers could be incentivized
to pass through a larger or more significant share of the rebates and
other discounts that they receive from drug manufacturers if those
discounts are effectively disclosed via historical net price
information.
---------------------------------------------------------------------------
\203\ 84 FR 65464, 65472 (Nov. 27, 2019).
---------------------------------------------------------------------------
The Departments acknowledge that there are potential adverse
consequences of requiring plans and issuers to make public rebates and
other price concessions, directly or indirectly, through the historical
net price. For instance, stakeholders such as PBMs and prescription
drug manufacturers could attempt to find ways to obscure rebates and
other price concessions such that they would not be required to be
publicly disclosed under the final rules. However, the Departments are
of the view that such attempts would likely be discouraged by the
nature of the disclosures themselves and would otherwise be
unsuccessful if attempted. A benefit of requiring the widespread public
disclosure of pricing information for prescription drugs is that the
transparency data itself can be used to identify where plans and
issuers (or third parties acting on their behalf) may be attempting to
circumnavigate disclosure requirements. Researchers and other entities
who aggregate and analyze the data will be able to compare pricing data
across plans and issuers. This can help identify plans and issuers
whose data is an outlier and identify them for further scrutiny by
regulators. The current lack of transparency in prescription drug
pricing does not allow this type of oversight and monitoring. While it
is possible that stakeholders will act in ways that conflict with the
intent of the public disclosures, it is also very likely that
transparency itself will help state and local regulators to identify
these anti-competitive practices. Indeed, it is possible that the
public disclosures could help to uncover other unknown anti-competitive
business practices that exist today. For these reasons, the Departments
are of the view that the benefits of public disclosure of prescription
drug pricing information outweigh the potential risk that certain
stakeholders may seek to take advantage of the disclosure requirements
in ways that would increase prescription drug costs.
A commenter observed that if the Departments were to include the
net price, it would be important to clarify that that the information
is not necessarily predictive of future transactions because
information about rebates is not known with certainty before a drug is
dispensed. The Departments recognize that prospective net prices for
prescription drugs could be complicated to estimate accurately due to
the nature of prescription drug pricing. Nonetheless, the Departments
are of the view that the historical net price will be a sufficiently
accurate guide for potential prescription drug prices and will fulfill
the objectives of the final rules.
The final rules adopt a requirement to include in the Prescription
Drug File the historical net price over a 90-day reporting period for
each NDC for dates of service within 180 days of the Prescription Drug
File publication date. This approach will ensure that data is composed
of the historical net price for relatively recent claims (rather than
older claims from multiple time periods) and will avoid the conflation
of payments from different periods of time. The Departments are of the
view that historical net prices from defined periods of time will
enable users to make meaningful comparisons across plans and coverages.
Additionally, the Departments chose this reporting reference period to
be consistent with the period proposed and being finalized through the
final rules for reporting of allowed amounts through the Allowed
Amounts File. The Departments are of the view that consistency across
machine-readable file requirements, where applicable, will reduce
potential confusion among file users as well as reduce burdens for
plans and issuers. The Departments are of the view that the 180-day
lookback period (which is expected to capture many of the market-share
and volume rebates and other price concessions) and requirement to make
a reasonable allocation will balance the need to be transparent in
current prices with the delayed timing of the application of certain
rebates and other price concessions.
To reasonably allocate any particular non-product specific or
product-specific rebate, discount, chargeback, fee, or other additional
price concession by dollar value of the drug where the totals amount is
fully known at the time of file publication, plans and issuers should
divide the rebate or discount amount by the total dollar value of drugs
on which the rebate is calculated, and then apply that percentage to
all applicable drugs. For example, if a rebate amount of $20,000 is
received during the 3-month file reference period in connection with
$100,000 in sales on two drugs during the same period, the rebate is
allocated as a 20 percent discount to the prices of those two drugs.
Sales for Drug A totaled $60,000 and sales for Drug B totaled $40,000.
A rebate of $12,000 ($60,000 multiple by 20 percent) is allocated to
Drug A, resulting in a historical net price populated in the
Prescription Drug File of $48,000. Similarly, a rebate of $8,000 is
allocated to Drug B, resulting in a historical net price populated in
the Prescription drug file of $32,000. The Departments are
[[Page 72239]]
aware that this allocation methodology will not always perfectly
allocate the rebate amounts because of the complexities of rebate
calculation, or because of timing issues. However, the Departments are
of the view that this simplified approach balances the goal of
providing actionable drug pricing information to the public while
limiting the burdens on plans and issuers in producing the information.
To reasonably allocate any particular non-product specific or
product-specific rebate, discount, chargeback, fee, or other additional
price concession where the total amounts are not fully known at the
time of file publication, plans and issuers must make a good faith,
reasonable estimate of the price concession using an historical
adjustment amount. To make this estimate, plans and issuers shall
determine the average value of price concessions for the relevant
product over a time period prior to the current reporting period and of
equal duration to the current reporting period and use that amount to
apply an estimated adjustment amount in the current reporting period.
For example, Plan X has $100,000 in total sales for 20,000 units--
averaging $5 per unit--of Drug A during the current reporting period,
which is January 1, 2020, through March 31, 2020. However, Plan X will
not know the total amount of product-specific rebate to expect for
sales of Drug A for at least another six months. To address this timing
issue, Plan X can apply a reasonable estimate to allocate an adjustment
to the current reporting period. For instance, Plan X can look back to
the total rebates received for the product during a comparable time
period. In this example, Plan X reviews its historical data and
determines the rebates received for Drug A, from the period between
January 1, 2019, and March 31, 2019, totaled $10,000 for sales of
30,000 units totaling $160,000. The average price per unit was $5.33
and the average discount per unit was $0.33 resulting in an average
final net price of $5 for Drug A. Plan X then applies this historical
rebate percentage to the current reporting period for Drug A. Plan X
subtracts $6,250 ($100,000 total sales for the current reporting period
multiplied by the estimated 6.25 percent historical rebate percentage)
from the $100,000 total sales for a total net price of $93,750 and an
average net price for Drug A, rounded to the nearest hundredth, of
$4.69. Plan X reports in the Prescription Drug File an average
historical net price for Drug A of $4.69 for the current reporting
period.
In the discussion of the Allowed Amounts File in the preamble to
the proposed rules, the Departments noted that providing the Allowed
Amounts information could raise health privacy concerns. The
Departments are of the view that similar concerns could be raised
regarding the historical net price information in the Prescription Drug
File. For example, there may be instances--such as in a small group
plan or with respect to an NDC for a rare chronic condition--where,
through deduction, disclosure of historical net price information may
enable users to identify the participant, beneficiary, or enrollee who
received a particular prescription drug because a very small number of
claims are used to derive the historical net price of a particular NDC
at a particular pharmacy or other prescription drug dispenser.
Additionally, as noted in relation to the Allowed Amount File, there
may also be instances when the historical net price public disclosure
requirement would be inconsistent with Federal or state laws governing
health information that are more stringent than HIPAA regarding the
use, disclosure, and security of health data that was produced pursuant
to a legal requirement, such that plans and issuers would be required
to further de-identify data. For example, some of the claims for
payment used to derive the historical net price could relate to
services provided for substance use disorders, which could implicate
disclosure limitations under 42 CFR part 2 governing the
confidentiality of patient records related to treating a substance use
disorder. The Departments are committed to protecting PHI. To address
privacy concerns, the final rules adopt an approach consistent with the
out-of-network Allowed Amount File. The final rules do not require
plans and issuers to provide historical net price data in relation to a
particular pharmacy or other prescription drug dispenser and a
particular NDC when compliance would require a plan or issuer to report
an historical net price for a particular pharmacy or other prescription
drug dispenser calculated with fewer than 20 different claims for
payment. Furthermore, the Departments note that disclosure of
historical net prices will not be required if compliance would violate
applicable health information privacy laws. The Departments are of the
view that these mitigation strategies, in addition to the historical
net price being an average of amounts paid to a particular provider for
a particular NDC during the reference period, are sufficient to protect
patients from identification based on information in the Prescription
Drug File. The Departments note that the low volume exemption applies
only to the requirement to include the historical net price and does
not affect the requirement to include the negotiated rates in the
Prescription Drug File.
Regarding prescription drugs, the Departments received a comment
that requested discounts under section 340B of the PHS Act be included
in the applicable machine-readable file, noting that providing this
information is important to ensure consumers can access those savings.
However, this commenter acknowledged that health plans often do not
have access to information about when a section 340B discount is paid
and so recommended the Departments develop and implement a process to
help health plans identify this information.
Discounts under the section 340B Drug Pricing Program are only
available to eligible providers (known as covered entities as outlined
in section 340B of the PHS Act) and regulations under section 340B of
the PHS Act are outside of the scope of the final rules.
2. Required Method and Format for Disclosing Information to the Public
As explained in section II.C.1.c of this preamble, the final rules
adopt the requirement that plans and issuers produce the In-network
Rate File, the Allowed Amount File, and the Prescription Drug File. The
Departments are finalizing a requirement that the In-network Rates,
Allowed Amounts, and Prescription Drug Files must be disclosed as
machine-readable files. The final rules define ``machine-readable
file'' to mean a digital representation of data or information in a
file that can be imported or read by a computer system for further
processing without human intervention, while ensuring no semantic
meaning is lost. The requirement ensures that the machine-readable file
can be imported or read by a computer system without those processes
resulting in alterations to the ways data and commands are presented in
the machine-readable file. The Departments proposed to require each
machine-readable file to use a non-proprietary, open format to be
identified by the Departments in technical implementation guidance (for
example, JavaScript Object Notation (JSON), Extensible Markup Language
(XML), or Comma Separate Value(s) (CSV)). A portable document format
(PDF) file, for example, would not meet this definition due to its
proprietary nature.
Contemporaneous with the proposed rules, the Departments published
a PRA package (OMB control number: 0938-1372 (Transparency in Coverage
(CMS-
[[Page 72240]]
10715)) that further described the specific data elements that would be
disclosed in the proposed machine-readable files. Updated cost and
burden estimates related to the collection requirements are discussed
in the ICR section of this preamble and are included in in the
corresponding PRA package, including changes to costs and burdens and
additional collection instruments as a result of modifications to the
proposed rule made through the final rules.
The Departments proposed requiring group health plans and health
insurance issuers to publish their negotiated rates and historical
allowed amount data in two machine-readable files, one including
required negotiated rate data with in-network providers, and a second
including required out-of-network allowed amount data. The Departments
proposed requiring plans and issuers to publish the data in two
separate machine-readable files to account for the dissimilarity
between the negotiated rates paid to in-network providers under
contract and the more variable allowed amounts paid to out-of-network
providers. The Departments solicited comment on whether building and
updating one file could be less burdensome for plans and issuers than
maintaining multiple files, and whether having the data in a single
file could facilitate use by third-party developers. The Departments
were particularly interested in comments regarding whether a single
file for disclosure of all the required information would likely be
extremely large, making it less than optimal for anticipated users,
such as software application developers and health care researchers.
Some commenters supported keeping the In-network Rates File and
out-of-network Allowed Amount File separate. One commenter noted the
structure would allow quick development of data aggregation efforts and
consumer-friendly tools. Additionally, the commenter stated that
keeping the files separate would support file ingestion. Another
commenter stated that each file would contain fundamentally different
data, and the costs associated with storing and maintaining a large
combined file would be very large.
The Departments agree that the information being required to be
publicly disclosed through the machine-readable files related to
negotiated rates and allowed amounts is sufficiently distinct to
justify separating the information into separate files. In particular,
the out-of-network allowed amounts information must be derived from
historical claims data, which is fundamentally different in kind from
simply listing applicable rates for each service. Furthermore, the
Departments also agree with comments indicating that splitting the
files would help reduce the maintenance and storage burdens of the
files. Throughout this preamble, the Departments have stressed the
importance of ensuring the public disclosures required through the
final rules are accessible, especially to internet-based and mobile
application developers, to support development of innovative consumer-
facing tools, as well as to other entities, such as researchers, and
regulators, to support efforts to better understand and support the
competitiveness of health care markets.
The requirement to publish more than one machine-readable file
which will facilitate the disclosure of data that is different in
character, scope, and other factors, which will help facilitate data
ingestion for users of the machine-readable files, including third-
party developers, researchers, regulators, and other interested
parties. This approach will also help facilitate file ingestion, data
aggregation, and data analysis by researchers whose projects could lead
to important market insights that could inform efforts to further
address the wide variation in health pricing, and by regulators who
would be able to leverage the data in their oversight activities.
As discussed earlier in this preamble, the final rules adopt a
third Prescription Drug File in recognition of the unique pricing
attributes of prescription drug products. Prices related to
prescription drug products that plans and issuers would have been
required to include in the In-network Rate File under the proposed
rules will now be required to be publicly disclosed through the third
Prescription Drug File. As discussed earlier in this preamble, the
Departments estimate that requiring a third file for prescription drugs
will not add significantly to the burdens and costs of developing and
maintaining the machine-readable files calculated in relation to the
final rules because costs and burdens calculated for prescription drugs
as included in the In-network Rate File will be transferred to the
Prescription Drug File. Additionally, the Departments anticipate that
removal of prescription drugs from the In-network Rate File will
significantly reduce the size of that file, which could reduce the
costs associated with maintenance and storage for the In-network Rate
File. The Departments clarify that not all prescription drug pricing
information required to be disclosed through the final rules is
required to be included in the Prescription Drug File. Rather, the
Prescription Drug File is required to include prescription drug pricing
information for in-network providers, including pharmacies and other
prescription drug dispensers, while the Allowed Amount File is required
to include prescription drug pricing information for out-of-network
providers, including pharmacies and other prescription drug dispensers.
The Departments also clarify that the In-network Rate file may also
contain prescription drug information to the extent the prescription
drug is a part of a bundled payment arrangement.
Some commenters argued that the method and format for providing
information to the public is not feasible. One commenter did not
support the policy that the machine-readable files should be provided
in a public use file format, claiming the files would be millions of
rows long and very difficult to review. Another commenter expressed
concern that the volume of data would make it impossible to post all of
the information in two files and further stated that there is no single
set of codes that describe every item or service, so it would be
impossible to post this data without very specific, standard
definitions. Given the lack of standard definitions, this commenter
argued that there is no systematic way to compile and display the
information requested, so claim compilation would have to be done
manually. The commenter further stated that, even if there were
standard definitions, it would be impossible to provide them in ``plain
language.''
Based on consultations with industry and IT development
professionals, the Departments do not agree with commenters who stated
that development of the machine-readable files would not be feasible as
envisioned by the proposed rules. The Departments are aware that these
files could be very large and could be difficult for laypersons to
navigate. However, the Departments are of the view that the files'
primary benefit to health care consumers will be the availability of
web-based tools and mobile applications developed for consumer use by
third-party developers, aggregation and analysis conducted by
researchers, and oversight efforts by regulators. The required machine-
readable files will be optimal for ingestion, data aggregation, and
data analysis, all of which are functions performed by third-party
internet-based developers, researchers, and regulators who use large
data sets in a manner that will lead to benefits for consumers.
Additionally, notwithstanding that the Departments have designed these
[[Page 72241]]
transparency requirements so that it is not necessary that individual
consumers use or ingest the data in the machine-readable files, the
Departments are of the view that many individual health care consumers
do possess the necessary expertise to access and navigate the files.
The final rules also impose a requirement to include plain language to
identify each item and service included in each file. This requirement
will help ensure consumers, third party application developers,
researchers, regulators, and other interested parties are able to
easily understand the information.
The Departments have determined that the potential benefits for
consumers of requiring the disclosure of required data through machine-
readable files outweigh the potential for consumer confusion at the
individual consumer level. Additionally, the Departments expect that
third party application developers, researchers, regulators, and other
file users will have the expertise to aggregate, standardize, and
interpret the pricing information included in the file and translate
the pricing information into products, research, and market oversight
and reforms that will ultimately benefit consumers.
The Departments also do not agree that the volume of data would
make the machine-readable files too large to post publicly, regardless
of whether the data is posted in two or three files. The Departments'
rough estimate of file size, based, in part, upon numbers provided by
commenters, suggests a file size of approximately 5 gigabytes.\204\ CMS
currently makes available for download on its website some large public
use file (PUF) data sets that are several gigabytes. For example, the
Part D Prescriber PUF, \205\ available on the CMS website, is over
three gigabytes in size. The Departments acknowledge that because of
the large file size, file users will likely need to use database or
statistical software to download the machine-readable files as
importing into Microsoft Excel would result in incomplete loading of
data. However, this approach is similar to that used for some of the
larger PUF data sets available on the CMS website, including the Part D
Prescriber PUF, which must be opened using specialty software.
---------------------------------------------------------------------------
\204\ As a reference point, a typical commercial two-hour Blu-
ray film is approximately 15-25 gigabytes. ``White Paper Blue-ray
Disc Format General.'' Blue-ray Disc Association. 2018. Available at
http://www.blu-raydisc.com/Assets/Downloadablefile/White_Paper_General_5th_20180216.pdf.
\205\ The Part D Prescriber Public Use File (PUF) is available
on the CMS website at the following location: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/PartD2017.
---------------------------------------------------------------------------
Assuming that plans' and issuers' negotiated rates are in a
digitized format, even if the negotiated rates are not stored in a
single database, this information can be systematically compiled and
maintained by the plan or issuer. In recognition that there is no
single set of billing codes for non-prescription drug services, the
Departments are providing flexibility in the final rules by not
prescribing which code or set of codes plans and issuers must use to
publicly disclose their data. Rather, the Departments are requiring
that plans and issuers associate each in-network applicable rate or
out-of-network allowed amount with a CPT, HCPCS code, DRG, or other
common payer identifier. In the case of prescription drugs, the
Departments are requiring plans and issuers to associate each
negotiated rate and historical net price with an NDC. The Departments'
expectation is that the type of billing code plans and issuers use to
populate the machine-readable files will be consistent with the billing
codes that plans and issuers use in their operations when actually
determining provider reimbursement and cost-sharing liability.
The Departments further note that nothing prevents plans and
issuers from including in the files a mixture of billing code types so
long as the billing codes included in the file are reflective of the
plan's or issuer's operations. To facilitate identification of the
billing code type, there will be an indicator in the file format
described by the technical implementation guidance that will allow
plans and issuers to specify the particular type of billing code
entered for each data entry in the machine-readable files. The final
rules also require that plans and issuers include plain language
descriptions for each billing code. The Departments note that in the
case of items and services that are associated with common billing
codes (such as the HCPCS codes), plans and issuers are permitted to use
the codes' associated short text description.
The final rules further clarify that, in the case of NDCs for
prescription drugs, the plain language description must be the
proprietary and nonproprietary name assigned to the NDC by the FDA. The
Departments have made this change to align with the change to require
only the NDC billing code to be used for prescription drugs. Requiring
the proprietary and nonproprietary name assigned to the NDC by the FDA
further standardized the product identifiers for prescription drugs and
will facilitate comparisons across prescription drug pricing
information for plans and issuers.
For all other items and services, as the Departments explicitly
stated in the proposed rules and elsewhere in this preamble, plans and
issuers can meet the ``plain language'' description requirements by
using their chosen code's short text description. However, the
Departments note that including the short text description for each
code is a minimum requirement and nothing in the final rules prevents
plans and issuers from providing a more consumer-friendly plain
language description for each covered item or service. Plans and
issuers may be incentivized to provide more consumer-friendly
information in machine-readable files because it may permit them to
include disclaimer or clarifying language in the files, where
applicable. Furthermore, if a plan or issuer uses plain language
descriptions for billing codes in its operations that are more
consumer-friendly than the established short text descriptions, the
Departments expect plans and issuers to include in the machine-readable
files the plain language descriptions they use in their operations.
The Departments received comments that supported the Departments'
development of specific technical standards for the files to which
plans and issuers must adhere. One commenter recommended the
Departments provide guidance to plan sponsors who are able to provide
some, but not all, of the file data elements. Another commenter stated
that the proposed rules do not make clear how to report items and
serviced provided through capitated and bundled payment arrangements in
the files; noting that this information is necessary for consumers to
measure provider value. One commenter responded positively to the
Departments' provision of technical implementation guidance for the
files, but requested a robust public comment solicitation far in
advance of the applicability date for the rules.
The Departments are of the view that providing specific technical
direction in separate technical implementation guidance, rather than in
the final rules, will better enable the Departments to respond to
technical issues and developments, as well as compliance questions
related to novel or rare payment arrangements. Therefore, as proposed,
the Departments are developing technical implementation guidance for
plans and issuers to assist them in developing the machine-readable
files.
The technical implementation guidance will be available online
[[Page 72242]]
through GitHub, a website and cloud-based service that helps developers
store and manage their code, as well as to track and control changes to
their code. The GitHub space offers the Departments the opportunity to
collaborate with industry, including regulated entities, and third-
party developers to ensure the file format is adapted for reporting of
the required public disclosure data for various plan and contracting
models. For example, the Departments have updated the schematics of the
file formats in response to comments received about and bundled
payments and capitated payment arrangements, as well as other
alternative contracting models. Plans and issuers will be able to
access the GitHub schemas at any time and collaborate with the
Departments in real-time.
The Departments' goal in using GitHub is to facilitate this
collaborative effort all allow plans and issuers to meet the public
disclosure requirements of the final rules while addressing their
unique IT system, issuer, and plan attributes. To the extent a plan or
issuer's unique attributes (for example, IT system, plan benefit
design, or reimbursement model) are not addressed sufficiently through
the technical implementation guidance, the Departments intend to
provide targeted technical assistance to ensure all plans and issuers
are able to meet the public disclosure requirements under the final
rules. The technical implementation guidance will provide instructions
on how to obtain this technical assistance should the need arise.
The technical implementation guidance hosted on GitHub will include
a repository set of schemas describing the data formats (encoded as
JSON, XML, and CSV) for all three machine-readable files: The In-
network Rate File, the Allowed Amount File, and the Prescription Drug
File. The technical implementation guidance will be available as part
of the PRA package developed for the ICRs included in the final rules.
As part of the PRA process, stakeholders have an additional opportunity
to submit comments related to the PRA for 30 days following the
publication of the final rules.
In the proposed rules, the Departments requested comment on whether
the final rules should adopt a single non-proprietary format for the
machine-readable files, specifically JSON files. The Departments
understand that this format generally is easily downloadable, and it
could simplify the ability of file users to access the data.
The Departments received one comment in support of requiring JSON
as the standardized file format for the required machine-readable
files. However, the Departments' internal technical experts agreed that
the speed of technology developments weighs heavily in favor of
maintaining flexibility to adopt a suitable file format as a non-
substantive, operational requirement that will be identified in the
relevant implementation guidance for the required machine-readable
files. Additionally, this flexibility will allow the Departments to
adapt the file technical specifications for new and emerging
technologies. Therefore, the Departments decline to require in
regulation a more specific file format for the machine-readable files.
The Departments reiterate that, as finalized, all machine-readable
files must conform to a non-proprietary, open-standards format that is
platform-independent and made available to the public without
restrictions that would impede the re-use of the information.
Therefore, because a PDF file format is proprietary, it would not be an
acceptable file format in which to produce the files. A plan or
issuer's file will be acceptable so long as it includes all required
data elements required for the respective file (that is, all applicable
rates in the In-network Rate File, allowed amounts and billed charges
in the Allowed Amounts File, and negotiated rates and historical net
process in the Prescription Drug File) and is formatted in a manner
consistent with the technical implementation guidance the Departments
are developing.
The final rules therefore adopt, with modification, the required
method and format for disclosure of information through the machine-
readable files. The Departments note several non-substantive
modifications to the regulatory text, which are being adopted in the
final rules to clarify and streamline the text. To further highlight
the file technical implementation guidance, the regulation text of the
final rules has been modified non-substantively to specify that the
machine-readable files must be made available in a form and manner
specified in guidance issued by the Departments. In the proposed rules,
the regulation text stated more broadly that the machine-readable files
must be made available in a form and manner determined by the
Departments. Additionally, the proposed rule included two sentences
that simply restated what must be publicly disclosed through the two
proposed machine-readable files.\206\ The Departments have removed
these sentences from this this section of the regulatory text because
they duplicate language contained in the previous sections of the
regulatory text, do not add any additional value to this section of the
regulatory text, and could cause confusion.
---------------------------------------------------------------------------
\206\ See 84 FR 65464, 65519 (Nov. 27, 2019).
---------------------------------------------------------------------------
3. Required Accessibility Standards for Disclosure of Information to
the Public
The Departments proposed to require a plan or issuer to make
available on an internet website the required machine-readable files,
and that the files must be accessible free of charge, without having to
establish a user account, password, or other credentials, and without
having to submit any personal identifying information such as a name,
email address, or telephone number. The Departments also proposed to
allow plans and issuers flexibility to publish the files in the
locations of their choosing based upon their superior knowledge of
their website traffic and the places on their website where the
machine-readable files would be readily accessible by the intended
users. The Departments are finalizing these requirements as proposed.
The Departments also considered requiring plans and issuers to submit
the internet addresses for the machine-readable files to CMS, and
having CMS make the information available to the public. A central
location could allow the public to access the information in one
centralized location, reducing confusion and increasing accessibility.
However, the Departments opted to propose flexible rules allowing plans
and issuers to publish the files in the locations they have chosen
based upon their determinations regarding where the files will be most
easily accessible by the intended users. The Departments also
considered that requiring plans and issuers to notify CMS of the
internet address for their machine-readable files would increase the
burdens on plans and issuers. The Departments requested comment on
whether the proposed requirement to allow issuers to display the files
in the location of their choice is superior to requiring plans and
issuers to report the internet-based addresses of their files to CMS
for public display. The Departments were specifically interested in
whether the burden associated with reporting file locations to CMS
would be outweighed by the risk that members of the public would be
unable to easily locate plans' and issuers' machine-readable files.
Several commenters supported the Departments' proposal to make the
machine-readable files easily and publicly available. One commenter
[[Page 72243]]
supported making the files available free of charge and stated that
individuals should not be required to register a user account,
password, or enter other credentials, or to submit PII to access the
files. Several commenters suggested alternative methods or more
stringent requirements for making public the information required to be
disclosed through the machine-readable files. One commenter expressed a
preference for CMS to maintain a centralized location on the CMS
website from which the public can access links to the files. The
commenter noted that if the Departments elected not to maintain a
centralized database, the Departments should require plans and issuers
to prominently display a link to the files in the main menu of the
homepage on their respective websites. Similarly, another commenter
asserted that the final rules should require issuers to report the
location of their files and provide a data dictionary to facilitate
oversight and enforcement of plans and issuers.
Other commenters suggested the Departments create a centralized
database to house the data required to be disclosed through the
machine-readable files. One commenter recommended the information
required to be disclosed through the files be loaded into a publicly
available searchable database that anyone can access prior to receiving
a medical service. Similarly, another commenter recommended that HHS
aggregate the data to create a centralized database. By contrast,
another commenter recommended the Departments should not create a
central location for negotiated rate information and historical data,
making the argument that the private sector is best suited to deliver
this information to consumers.
As proposed, the machine-readable files must be made publicly
available and accessible to any person free of charge and without
conditions, such as establishment of a user account, password, or other
credentials, or submission of PII to access the file. Additionally, the
proposed rules specified that the files must be made available in the
form and manner specified by the Departments. While the Departments
considered comments related to the manner of the public file
disclosures (such as prominent display on a plan or issuer's homepage),
the Departments are also mindful of the need to provide flexibility to
plans and issuers so that they are able to house the files in a
location that meets their unique technical specifications. At this
time, the Departments are of the view that reporting of the links to
the file locations is not necessary to achieve the goals of the final
rules. However, the Departments note that nothing in the final rules
prevents a Federal or state regulatory body, such as a state Department
of Insurance (DOI), from collecting this information from issuers
subject to their jurisdiction.
The Departments are aware and understand commenters' interest in
HHS aggregating and centralizing all of the data required to be
publicly disclosed through the machine-readable files. However, the
Departments are of the view that HHS is not best suited for this role.
As noted throughout this preamble, the Departments expect making
negotiated rate and allowed amount information available through the
machine-readable files will spur third-party internet-based developers
to innovate, resulting in consumer-facing tools. The Departments
anticipate that these consumer-facing tools developed by third parties
could act as centralized databases, aggregating the pricing information
for many plans and issuers. The Departments are of the view that the
private sector is better suited to developing internet-based tools
using this information than the Departments, and further, that the
competition spurred by several different third parties operating in
this space could benefit consumers seeking to find the third-party tool
that is best suited to their individual consumer needs.
The final rules adopt, as proposed, the accessibility requirements
for the machine-readable files. The final rules clarify that the
accessibility requirements apply to all three machine-readable files
finalized within the final rules: The In-network Rate File (referred to
in the proposed rules as the Negotiated Rate File), the Allowed Amount
File, and the Prescription Drug File.
4. Required Timing of Updates of Information To Be Disclosed to the
Public
The proposed rules would have required group health plans and
health insurance issuers to update the information required to be
included in each machine-readable file monthly. The Departments also
proposed to require plans and issuers to clearly indicate the date of
the last update made to the In-network Rate Files and Allowed Amount
Files in accordance with guidance issued by the Departments.
The Departments recognized in the proposed rules that information
in In-network Rate Files (referred to in the proposed rules as the
Negotiated Rate Files) could change frequently and considered whether
to require plans and issuers to update their In-network Rate Files more
often than monthly to ensure that consumers have access to the most up-
to-date negotiated rate information. Accordingly, the Departments
sought comment on whether the final rules should require plans' and
issuers' In-network Rate Files to be updated more frequently. The
Departments also sought comment on an alternate proposal that would
require plans and issuers to update negotiated rate information within
10 calendar days after the effective date of new rates with any in-
network provider, and on whether the update timelines for negotiated
rate information and historical out-of-network payment data should be
the same.
For the reasons discussed elsewhere in this section of this
preamble, the final rules adopt, as proposed, the requirement for a
plan or issuer to update the information required to be included in
each machine-readable file monthly. The final rules clarify that this
requirement to update the machine-readable files monthly applies to all
three machine-readable files being finalized through the final rules:
The In-network Rate File, the Allowed Amount File, and the Prescription
Drug File.
Several commenters stated that the requirement to update the In-
network Rate Files and Allowed Amount Files monthly is operationally
burdensome and the benefits of this requirement are limited because the
information will not change significantly on a monthly basis. Some
commenters recommended the Departments change the required frequency of
updates to every six months, while others suggested that the final
rules require updates to the In-network Rate File less frequently than
monthly (for example, quarterly or semi-annually), but recommended that
the Allowed Amount File should be updated monthly. Another commenter
recommended a phased-in approach where the files would be updated twice
a year in the first year of implementation and quarterly thereafter. In
contrast, one commenter recommended the files be updated in real-time
as soon as updates to rates are made.
Based on consultation with government-affiliated IT experts and the
design of the file schemas, the Departments are of the view that
building the first machine-readable file will facilitate the automation
of the process to build future files. In other words, the ability to
produce subsequent files should be streamlined after completing initial
development. Therefore, the Departments do not find
[[Page 72244]]
persuasive the contention that requiring file updates monthly will
significantly increase the overall costs and burdens related to
producing the files. The Departments, however, do not agree that the
files should be updated in real-time as soon as updates are made. With
the monthly update requirement, the Departments are seeking to balance
the need to ensure the data is current and accurate for consumers with
minimizing burdens on plans and issuers.
As noted in the proposed rules, the Departments acknowledge there
will be some costs with making updates to the files, including costs to
ensure the quality of data and costs associated with posting the
information on a public website. The Departments are of the view that
requiring plans and issuers to update the files on a monthly basis will
sufficiently limit the burden while ensuring that the most current data
generally available. However, requiring updates to the files more or
less frequently would not adequately balance these interests. Requiring
updates to the files more frequently (such as on a daily basis), would
add potentially unnecessary burdens for plans and issuers. Requiring
updates to the files less frequently would potentially result in
consumers relying on outdated information for health care purchasing
decisions. While negotiated rates, in particular, may not change
frequently for any one contract with a provider or group of providers,
the Departments understand that payer-provider contracts are updated on
a rolling basis and throughout the year. Therefore, updates throughout
the year are needed in order to ensure that the information disclosed
remains up-to-date.
The final rules also require that the Prescription Drug File be
updated on a monthly basis. The Departments understand the complexities
of prescription drug pricing and are aware that drug prices can
fluctuate as frequently as daily. However, the Departments have
determined that aligning the frequency of updates of all machine-
readable files will mitigate the burden associated with maintaining the
files for plans and issuers, and will best balance the need for
disclosing current and accurate information against that burden. The
Departments are aware that the number of pricing updates in the monthly
Prescription Drug File will likely be more than the number of monthly
pricing updates for medical services in the In-network Rate File.
However, the Departments are of the view that if plans and issuers can
update their pharmacy claims processing systems in real-time to account
for fluctuating prices and adjudicate claims for prescription drugs,
then the burden to pull current pricing information into the
Prescription Drug File should be manageable.
The Departments will monitor the implementation of the machine-
readable file requirements and consider updates in future rulemaking if
it is determined that monthly updates are not adequately balancing the
need for accurate and current information against the burdens for plans
and issuers.
5. Special Rules To Prevent Unnecessary Duplication and Allow for
Aggregation
Similar to the proposed cost-sharing information disclosure
requirements for participants, beneficiaries, and enrollees, the
Departments proposed a special rule to streamline the publication of
data that would be included in the proposed machine-readable files.
This special rule has three components: One for insured group health
plans where a health insurance issuer offering coverage in connection
with the plan has agreed to provide the required information, another
for plans and issuers that contract with third parties to provide the
information on their behalf, and a special rule allowing aggregation of
out-of-network allowed amount data.
a. Insured Group Health Plans
The Departments proposed that, to the extent coverage under a group
health plan consists of group health insurance coverage, the plan would
satisfy the proposed machine-readable file requirements if the issuer
offering the coverage were required to provide the information pursuant
to a written agreement between the plan and issuer. Accordingly, if a
plan sponsor and an issuer enter into a written agreement under which
the issuer agrees to provide the information required under the
proposed rules, and the issuer fails to provide full or timely
information, then the issuer, but not the plan, has violated the final
rule's disclosure requirements. This special rule would only apply,
however, to insured group health arrangements where the contractually-
obligated issuer is independently subject to the final rules.
The Departments received comments expressing strong support of the
special rule to streamline public disclosure and avoid unnecessary
duplication of disclosures for insured group health insurance coverage.
These commenters recommended the policy be retained in the final rules.
Accordingly, the final rules retain this special rule as proposed.
b. Use of Third Parties To Satisfy Public Disclosure Requirements
The Departments recognize that self-insured group health plans may
rely on written agreements with other parties, such as service
providers, to obtain the necessary data to comply with the final rules'
disclosure requirements. Furthermore, it is the Departments'
understanding that most health care coverage claims in the U.S. are
processed through health care clearinghouses and that these entities
maintain and standardize health care information, including information
regarding negotiated rates and out-of-network allowed amounts.\207\ As
a result, the Departments noted in the proposed rules that a plan or
issuer may reduce the burden associated with making negotiated rates
and out-of-network allowed amounts available in machine-readable files
by entering a business associate agreement and contracting with a
health care claims clearinghouse or other HIPAA-compliant entity to
disclose this data on its behalf.\208\ Accordingly, the Departments
proposed to permit a plan or issuer to satisfy the public disclosure
requirement of the proposed rules by entering into a written agreement
under which another party (such as a TPA or health care claims
clearinghouse) will make public the required information in compliance
with this section. However, if a plan or issuer chooses to enter into
such an agreement and the party with which it contracts fails to
provide full or timely information, the plan or issuer will have
violated the final rules' disclosure requirements.
---------------------------------------------------------------------------
\207\ The Departments are adopting the definition of health care
clearinghouse under 45 CFR 160.103 for purposes of these rules.
Under that definition, health care clearinghouse means a public or
private entity that performs one of two functions that involve the
receiving and processing of health information data from a non-
standard format to a standard format or non-standard data elements
to standard data elements and vice versa.
\208\ 45 CFR 164.502(a)(3) and 164.504(e)(2).
---------------------------------------------------------------------------
Generally, commenters supported the use of clearinghouses or TPAs
to store all of the information that must be disclosed under the
proposed rules. One commenter suggested that all HIPAA-compliant third
parties, not just clearinghouses, be allowed to satisfy the public
disclosure requirements. Some commenters raised concerns related to
using clearinghouses noting that the feasibility of using
clearinghouses is dependent on the clearinghouse receiving all of the
necessary data from health insurance issuers and providers who possess
the data. The commenter strongly recommended the final rules require
entities that possess the data to
[[Page 72245]]
share the information in a timely manner with the relevant
clearinghouses. The commenter also noted the costs charged by
clearinghouses associated with data storage and noted that the prices
must be reasonable and not discriminatory (for example, against smaller
plans).
Several commenters recommended the Departments' special rule
include protection for plan sponsors if they fail to meet the public
disclosure requirements due to an inability, while acting in good
faith, to obtain the data from a third-party service provider or when a
contracted third-party withholds information or fails to submit
information in a timely manner. One of these commenters also requested
the Departments establish a policy that liability for failure to comply
rests with a contracted third party in the event a plan sponsor can
show that, acting in good faith, it is unable to comply with the
disclosure requirements due to withholding of information by the third
party.
This special rule, as finalized, continues to permit a plan or
issuer to satisfy the public disclosure requirements of 26 CFR 54.9815-
2715A3(b), 29 CFR 2590.715-2715A3(b), and, 45 CFR 147.212(b) of the
final rules by entering into a written agreement under which another
party (such as a TPA or health care claims clearinghouse) will make
public the required information in compliance with this section. The
final rules identify TPAs and health care claims clearinghouses as
examples of the types of parties a plan or issuer may contract with,
but these are not the only types of entities that may enter into such
arrangements and the Departments expect that they will comply with any
applicable privacy protection requirements, including applicable
privacy protections under HIPAA.
Plans and issuers are not required to enter into such agreements in
order to comply with the public disclosure requirements of the final
rules. As the Departments noted in the preamble to the proposed rules,
if a plan or issuer chooses to enter into such an agreement it is
ultimately the responsibility of the plan or issuer to ensure that the
third party provides the information required by the final rules. As
noted earlier in this section, the special rule for insured plans is
only available to plans that contract with an entity that is an issuer
separately subject to final rules. This requirement ensures that the
Departments retain a mechanism to enforce the final rules. Accordingly,
this special rule relating to the use of third parties to satisfy these
requirements continues to provide that the plan or issuer would violate
the requirements of the final rules if the third party fails to provide
full or timely information.
Another commenter recommended the Departments create a special rule
or ``safe harbor'' for plans that are unable to disclose negotiated
rate information due to antitrust laws, which prevent the plan from
accessing information about its partners' contracts when engaged in a
partnership alliance agreement. The commenter described a partnership
alliance as shared partner networks in other geographic areas in order
to meet the needs of multi-state employer groups.
As discussed earlier in this preamble, the Departments acknowledge
that the Sherman Antitrust Act prohibits any contract, combination, or
conspiracy in restraint of trade or commerce.\209\ Specifically, the
law prohibits any ``person'' from entering into any such contract,
trust, or similar arrangement.\210\ Nothing under the proposed or final
rules creates, compels, or endorses agreements or conspiracies between
or among persons to form illegal arrangements or trusts in restraint of
trade or commerce. Antitrust law does not proscribe or limit action by
the Federal Government, to improve competition and lower costs to
consumers, even if these actions may involve disclosures that, if made
by private parties under a collusive agreement, might invite antitrust
scrutiny.\211\ Because the Departments are of the view that antitrust
law will not prevent plans and issuers from making the public
disclosures required under the final rules, there is no need for the
Departments to create a special rule for plans that are unable to
disclose negotiated rate information due to antitrust laws.
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\209\ 15 U.S.C. 1.
\210\ Id.
\211\ For example, see 84 FR 65464, 65464-65 (Nov. 27, 2019).
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One commenter expressed a concern that multiemployer plans
generally do not have access to the rate information needed to provide
the cost-sharing disclosures required under the proposed rules, yet
plans could be subject to significant penalties for failure to comply.
The Departments note that insured multiemployer plans would qualify for
the special rule for insured plans under which an issuer providing
coverage for a plan enters into an agreement to provide the required
information, which is being finalized through the final rules. If a
multiemployer plan sponsor enters into a written agreement with an
issuer under which the issuer agrees to provide the information
required under the final rules, and the issuer fails to provide full or
timely information, then the issuer, but not the plan, has violated the
transparency disclosure requirements and may be subject to enforcement
mechanisms applicable to plans under the PHS Act.\212\ Therefore,
insured multiemployer plans that contract with an issuer to provide the
information required under the final rules would not be subject to
enforcement actions under this mechanism; rather, the issuers with whom
they have contracted will be subject to enforcement action under the
final rules for failure to meet the transparency disclosure
requirements.
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\212\ Section 2723 of the PHS Act.
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Under the second special rule, multiemployer plans may also
contract with a TPA or other third party (for example, a clearinghouse)
to meet the transparency disclosure requirements under the final rules.
However, this commenter is correct that if a plan or issuer chooses to
enter into such an agreement, and the party with which it contracts
fails to provide full or timely information, the plan or issuer would
violate the transparency disclosure requirements.
The notion that accountability for compliance rests with a plan or
issuer when the issuer or plan enlists a contractor or vendor for a
business function is not inconsistent with other applicable
regulations.\213\ While claims processing is the main function for
which an issuer or plan has contracted in this example, other
responsibilities, such as responding to Federal audits and report
requirements, may fall within the scope of the duties required by
contract. The Departments clarify that nothing in the final rules
prevents an issuer or plan from ensuring contracts with TPAs or other
third parties include clear terms specifying functions required to meet
the disclosure requirements of the final rules, as well as establish
service level agreements and performance metrics to hold the entities
with whom the issuer or plan decides to contract accountable.
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\213\ For example, plans remain liable for violations of claims
regulations under 26 CFR 54.9815-2719 and 29 CFR 2590.715-2719; and
QHPs issuers who contract with downstream or delegated entities must
maintain compliance with all applicable standards under 45 CFR
156.340(a).
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Because multiemployer plans may be able to take advantage of the
special rules established under the proposed rules, the Departments do
not view additional special considerations necessary to address the
ability of such
[[Page 72246]]
plans to comply with the transparency requirements of the final rules.
c. Aggregation for Allowed Amount Files
In order to further mitigate privacy concerns and to eliminate
unnecessary duplication, the Departments proposed to permit plans and
issuers to satisfy the public disclosure requirements of the proposed
rules by making available out-of-network allowed amount data that has
been aggregated to include information from more than one plan or
policy. As previously discussed, a plan or issuer may satisfy the
disclosure requirement by disclosing out-of-network allowed amounts.
Accordingly, under such circumstances, the proposed rules would have
permitted plans and issuers to aggregate out-of-network allowed amounts
for more than one plan or insurance policy or contract.
To the extent a plan or issuer provided aggregated out-of-network
allowed amount information, the Departments proposed to apply the
minimum claims threshold to the aggregated claims data set, but not at
the plan or issuer level. Based on commenters' requests for
clarification, the Departments have determined that the proposed
approach to apply the minimum claims threshold to the full aggregated
claims data set could undermine the goal of the minimum claims
threshold. The out-of-network Allowed Amount File must include a unique
plan identifier for each plan or coverage included in the file under 26
CFR 54.9815-2715A3(b)(1)(ii)(A), 29 CFR 2590.715-2715A3(b)(1)(ii)(A),
and 42 CFR 147.212(b)(1)(ii)(A). Therefore, even if the data for each
plan or coverage were to be aggregated for purposes of determining
whether the minimum claims threshold applies to a particular covered
item or service, the data in the Allowed Amounts File would be
distinguishable at the level of the plan identifier. The Departments
are of the view that this could be problematic if all plans or coverage
included in an aggregated Allowed Amount File meet the minimum claim
threshold for an item or service when combined, but some or all
individual plans do not independently meet the minimum claim threshold
of 20 claims.
For instance, data for two plans are aggregated in the same Allowed
Amount File under this rule. Plan A has 20 claims for Service X, while
Plan B only has six claims for Service X. In aggregate, the plans meet
the 20-claim threshold with 26 total claims for Service X. However,
individually, only Plan A has met the minimum claim threshold. Under
the proposal, data for Service X would be required to be included for
both Plan A and Plan B, along with both the plan identifiers. The
outcome of this requirement would be that Plan B would include data
identifiable at the plan level for Service X. The Departments are of
the view that allowing Plan B data to be included in the file for
Service X would undermine the minimum claim threshold, increasing risk
that individual patients' claims histories could be identified. To
prevent this outcome, data for each plan or coverage included in an
aggregated Allowed Amount File must independently meet the minimum
claims threshold for each item or service and for each plan or coverage
included in the aggregated Allowed Amount File. To highlight this
requirement, the Departments are finalizing this provision of the
proposed rules with a minor modification clarifying that the
flexibility to aggregate out-of-network allowed amounts for more than
one plan or coverage in a single machine-readable file is still subject
to the minimum claims threshold applicable to individual plans or
coverage as described under paragraph (b)(1)(ii)(C) of the same
section.
One commenter requested clarification of a plan's obligation if a
third party aggregates the Allowed Amount File. The commenter
specifically requested clarification regarding whether the plan or
third party would be responsible for posting the file, and whether
there will be any special labeling requirements for an aggregated file,
including if the file will need to include a disclosure that it
includes aggregated data.
Nothing in the final rules prevents the Allowed Amount File from
being hosted on a third-party website or prevents a plan administrator
from contracting with a third party to post the file. The Departments
have added text to the final rules to make clear that this flexibility
exists and to provide that if a plan chooses not to also host the file
separately on its own public website, it must provide a link on its
website to the location where the file is publicly available. The
Departments will provide additional information on the form and manner,
including labeling, through the file technical implementation guidance.
III. Overview of the Final Rule Regarding Issuer Use of Premium Revenue
Under the Medical Loss Ratio Program: Reporting and Rebate
Requirements--The Department of Health and Human Services
As stated in the preamble to the proposed rules, consumers with
health insurance often lack incentives to seek care from lower-cost
providers, for example when consumers' out-of-pocket costs are limited
to a set copayment amount regardless of the costs incurred by the
issuer. Innovative benefit designs can be used to increase consumer
engagement in health care purchasing decisions. HHS proposed to allow
issuers that empower and incentivize consumers through the introduction
of new or different plans that include provisions encouraging consumers
to shop for services from lower-cost, higher-value providers, and that
share the resulting savings with consumers, to take credit for such
``shared savings'' payments in their MLR calculations. HHS believes
this approach preserves the statutorily-required value consumers
receive for coverage under the MLR program, while encouraging issuers
to offer new or different plan designs that support competition and
consumer engagement in health care.
Formula for Calculating an Issuer's Medical Loss Ratio (45 CFR 158.221)
Section 2718(b) of the PHS Act requires a health insurance issuer
offering group or individual health insurance coverage (including
grandfathered health insurance plans) to provide rebates to enrollees
if the issuer's MLR falls below specified thresholds (generally, 80
percent in the individual and small group markets and 85 percent in the
large group market). Section 2718(b) of the PHS Act generally defines
MLR as the percentage of premium revenue (after certain adjustments) an
issuer expended on reimbursement for clinical services provided to
enrollees and on activities that improve health care quality.
Consistent with section 2718(c) of the PHS Act, the standardized
methodologies for calculating an issuer's MLR must be designed to take
into account the special circumstances of smaller plans, different
types of plans, and newer plans.
Several states have considered or adopted legislation over the last
few years to promote health care cost transparency and encourage
issuers to design and make available plans that ``share'' savings with
enrollees who shop for health care services and choose to obtain care
from lower-cost, higher-value providers.\214\ In addition, at least
five states and a number of self-insured group health plans have
incorporated such ``shared savings'' provisions into
[[Page 72247]]
all or some of their health plans.\215\ Under some plan designs, the
savings are calculated as a percentage of the difference between the
rate charged by the provider chosen by the consumer for a medical
procedure and the average negotiated rate for that procedure across all
providers in the issuer's network. Under other plan designs, the
``shared savings'' are provided as a flat dollar amount according to a
schedule that places providers in one or more tiers based on the rate
charged by each provider for a specified medical procedure. Under
various plan designs, the ``shared savings'' may be provided in form of
a gift card, a reduction in cost sharing, or a premium credit. HHS is
of the view that such unique plan designs would motivate consumers to
make more informed choices by providing consumers with tangible
incentives to shop for care at the best price. As explained elsewhere
in the preamble to the proposed rules, there is ample evidence that
increased transparency in health care costs would lead to increased
competition among providers.\216\ HHS is of the view that allowing
flexibility for issuers to include savings they share with enrollees in
the numerator of the MLR would increase issuers' willingness to
undertake the investment necessary to develop and administer plan
features that may have the effect of increasing health care cost
transparency, which in turn could lead to reduced health care costs.
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\214\ 24-A Maine Rev. Stat. Ann. Sec. 4318-A (adopted Jun. 19,
2017); Neb. Rev. Stat. Sec. 44-1401 et seq. (adopted Apr. 23, 2018);
Utah Code Ann. Sec. 31A-22-647 (adopted Mar. 19, 2018); AZ SB 1471
(2018); N.H. HB 1784-FN (2018); MA H2184 (2017).
\215\ See the State of Kansas' SmartShopper program for state
employees enrolled with BCBSKS, available at: https://healthbenefitsprogram.ks.gov/docs/default-source/site-documents/sehp/vendor-documents/bcbs/smartshopper_state_of_kansas_steps.pdf?sfvrsn=cfa4e44_8; the state
of Kentucky employee member handbook for Livingwell CDHP's
SmartShopper program, available at: https://personnel.ky.gov/KEHP/2020%20LivingWell%20CDHP%20Medical%20Benefit%20Booklet.pdf and
https://www.smartshopper.com/legacy?utm_expid=.WJ_v45PuTXuo1k6ioPp4tA.1&utm; the State of
Massachusetts employee member handbook for Fallon Health Select
Care's SmartShopper program, available at: https://www.mass.gov/doc/fallon-select-care-handbook-fy21/download; the State of New
Hampshire employee medical benefit, the Site of Service and Vitals
SmartShopper Programs, available at: https://das.nh.gov/riskmanagement/active/medical-benefits/cost-savings-programs.aspx#vitals-smartshopper; Utah Public Employees Health
Program Cost Tools, available at: https://www.pehp.org/save.
\216\ Austin, D. A., and Gravelle, J. G. ``Congressional
Research Service Report for Congress: Does Price Transparency
Improve Market Efficiency? Implications of Empirical Evidence in
Other Markets for the Healthcare Sector.'' Congressional Research
Service. July 24, 2007.''Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
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HHS has in the past exercised its authority under section 2718(c)
of the PHS Act to take into account the special circumstances of
different types of plans by providing adjustments to increase the MLR
numerator for ``mini-med'' and ``expatriate'' plans,\217\ student
health insurance plans,\218\ as well as for QHPs that incurred Exchange
implementation costs \219\ and certain non-grandfathered plans (that
is, ``grandmothered'' plans).\220\ This authority has also been
exercised to recognize the special circumstances of new plans \221\ and
smaller plans.\222\ Consistent with this approach, HHS proposed to
exercise its authority to account for the special circumstances of new
and different types of plans that provide ``shared savings'' to
consumers who choose lower-cost, higher-value providers by adding a new
paragraph 45 CFR 158.221(b)(9) to allow such ``shared savings''
payments to be included in the MLR numerator. HHS made this proposal so
that issuers would not be required to pay MLR rebates based on a plan
design that would provide a benefit to consumers that is not currently
captured in any existing MLR revenue or expense category. HHS proposed
that the amendment to 45 CFR 158.221 would become effective beginning
with the 2020 MLR reporting year (for reports filed by July 31, 2021).
HHS invited comments on this proposal.
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\217\ See 45 CFR 158.221(b)(3) for ``mini-med'' plans and 45 CFR
158.221(b)(4) for ``expatriate'' plans; see also the Health
Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements
Under the Patient Protections and Affordable Care Act; Interim Final
Rule; 75 FR 74864, 74872 (Dec. 1, 2010).
\218\ See 45 CFR 158.221(b)(5); see also the Student Health
Insurance Coverage; Final Rule, 77 FR 16453, 16458-16459 (Mar. 21,
2012).
\219\ See 45 CFR 158.221(b)(7); see also the Exchange and
Insurance Market Standards for 2015 and Beyond; Final Rule; 79 FR
30240, 30320 (May 27, 2014).
\220\ See 45 CFR 158.221(b)(6); see also 79 FR 30240, 30320 (May
27, 2014). See 45 CFR 158.221(b)(6); see also 79 FR 30240, 30320
(May 27, 2014); see also 45 CFR 158.221(b)(6); see also 79 FR 30240,
30320 (May 27, 2014). ``Grandmothered'' plans is a term for certain
non-grandfathered coverage in the small group and individual health
insurance markets. Since 2014, CMS has permitted, subject to
applicable State authorities, health insurance issuers to continue
certain coverage that could not otherwise remain in place without
significant changes to comply with PPACA. Such health insurance
coverage would not be treated as out of compliance with sections
2701-2707 and 2709 of the PHS Act and section 1312(c) of PPACA
(group health plans must still comply with section 2704 and 270505
of the PHS Act). See Extended Non-Enforcement of Affordable Care
Act-Compliance With Respect to Certain Policies, available at
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Limited-Non-Enforcement-Policy-Extension-Through-CY2020.pdf and https://www.cms.gov/files/document/extension-limited-non-enforcement-policy-through-calendar-year-2021.pdf.
\221\ See 45 CFR 158.121; see also 75 FR 74864, 74872-74873
(Dec. 01, 2010) and the HHS Notice of Benefit and Payment Parameters
for 2018 Final Rule; 81 FR 94058, 94153-94154 (Dec. 22, 2016).
\222\ See 45 CFR 158.230 and 158.232; see also 75 FR 74864,
74880 (Dec. 01, 2010).
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After considering the public comments, HHS is finalizing the
amendment to 45 CFR 158.221(b) as proposed.
The majority of comments on the proposed amendments to the MLR
program rules supported the proposal to add a new paragraph to 45 CFR
158.221(b). Supporters noted that allowing issuers to include ``shared
savings'' payments in their MLR calculation aligns issuer and enrollee
incentives, aligns with MLR's purposes, is innovative, provides
enrollees with value, increases consumer engagement and empowerment,
and will promote better enrollee decision-making and reduce total
health care costs. Several supportive commenters also noted that the
proposal may encourage more issuers to offer such ``shared savings''
programs, as allowing ``shared savings'' payments to be included in the
MLR numerator will remove any existing barriers to such programs and
facilitate the use of innovative benefit designs that increase consumer
engagement in health care purchasing decisions, while disallowing this
approach punishes issuers that offer innovative ``shared savings''
programs and disincentivizes issuers from adopting such programs.
Several commenters stated that there is evidence that patients are more
likely to shop for care when information on prices is coupled with
incentives, and that such shopping can generate significant savings for
issuers and lead health care providers to lower their prices in order
to remain competitive in the marketplace.\223\
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\223\ For example, one commenter shared that since 2015, its
``shared savings'' program issued over 149,000 incentive reward
payments, generating over $85 million in savings. See https://beta.regulations.gov/document/CMS-2019-0163-14320.
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HHS agrees with the comments in support of the proposal and is
finalizing this amendment as proposed to provide additional flexibility
to states and issuers and encourage the economic effects the commenters
highlighted.
Some commenters requested clarification regarding certain aspects
of the ``shared savings'' plans. Several commenters requested that HHS
develop uniform standards and a definition for ``shared savings,''
which according to commenters would, among other things, help prevent
fraud and abuse; and that HHS clarify the criteria for low-cost, high-
value providers. One commenter asked HHS to provide sub-regulatory
guidance to specify in what form the savings can be shared, how issuers
will report their ``shared
[[Page 72248]]
savings,'' how double-counting can be prevented, and whether ``shared
savings'' payments are taxable income. Other commenters suggested that
HHS provide maximum flexibility for issuers and states to innovate and
develop ``shared savings'' programs they determine are best suited for
their populations.
While HHS appreciates these suggestions and is also concerned with
preventing fraud and abuse, HHS is of the view that state legislators
and regulators are currently in a better position than HHS to work with
the issuers in their states to define the ``shared savings'' programs
that they support, issue standards and criteria for the programs for
their respective constituents, and decide in what form the savings can
be made. These considerations include the operational details of any
``shared savings'' program, such as creating standards and definitions,
developing acceptable payment methods, and addressing fraud concerns.
HHS notes that several issuers have already developed and implemented
such programs and that a few states have done the same. The amendment
being finalized in this rulemaking is specific to the recognition of
``shared savings'' payments in issuer MLR calculations and is intended
to encourage more state and issuer innovation with these types of
programs. Accordingly, HHS will provide technical guidance in the MLR
Annual Reporting Form Instructions to clarify the reporting of ``shared
savings'' payments specifically for MLR purposes. With respect to the
comment regarding how double-counting can be prevented, HHS notes that
45 CFR 158.170 prevents double-counting by requiring each expense to be
reported in only one category or to be pro-rated between categories for
MLR purposes. Finally, whether ``shared savings'' payments to enrollees
are taxable will vary based on certain specific facts and
circumstances. Some forms of ``shared savings'' may be taxable;
however, HHS defers to the Department of the Treasury to address the
taxability of such payments as necessary.
Opponents of the proposal stated that it fails to ensure that the
savings are actually used for health care or quality improvement
activities (QIA), that HHS is subverting the statutory scheme by
allowing issuers to spend less on enrollees' care and quality
initiatives without returning the premium dollars saved to all
enrollees, and that the proposal would allow issuers to further boost
profits and diminish the MLR standards and issuer accountability. Some
opponents of the proposal argued that since any plan type can offer
``shared savings,'' adding a ``shared savings'' payment component to a
policy does not make it a ``different'' type of plan and it should not
be treated as such. Others were concerned that the proposal would
incentivize issuers to artificially drive down negotiated rates with
providers and that these savings may not make their way back to
enrollees. One commenter opposed extending ``shared savings'' programs
to self-insured ERISA plans. Another commenter pointed out that the
National Association of Insurance Commissioners (NAIC) did not mention
the proposal in its comments and the MLR statute provides that the NAIC
shall establish the definitions and methodologies for MLRs.
HHS agrees that ``shared savings'' are neither an incurred claim
nor a QIA. Instead, in support of this amendment to 45 CFR 158.221(b),
HHS is relying on the statutory directive under section 2718(c) of the
PHS Act that the MLR standardized methodologies shall be designed to
take into account the special circumstances of different types of plans
and newer plans, such as plans that offer ``shared savings'' payments
to enrollees that seek care from lower-cost, higher-value providers.
HHS believes that any issuer that includes in its plan design(s) a
``shared savings'' component is offering a ``different'' type of plan
and a ``newer'' plan, as a ``shared savings'' program is a new and
unique feature. HHS notes that the amendment finalized in these rules
helps provide policyholders with value for their premium dollars, as
intended by section 2718 of the PHS Act. HHS disagrees that the
amendment somehow subverts the statutory scheme as issuers that
implement these programs are sharing the savings and returning dollars
to enrollees who participate in these programs, and issuers must still
otherwise meet the applicable MLR threshold or provide a rebate to
enrollees. For the same reasons, HHS does not share certain commenters'
view that the amendment weakens the MLR standards and enables issuers
to improperly boost profits, as the amendment simply allows issuers to
account for the portion of the ``shared savings'' that is passed to
participating enrollees and that consequently does not increase
issuers' profits. With respect to comments regarding the impact on
provider negotiated rates and enrollee access to savings, HHS is unsure
how the amendment would incentivize issuers to artificially drive down
negotiated rates with providers. However, if as a result of this
amendment, provider rates decrease, such a result would in fact benefit
enrollees. In addition, because only actual payments made to enrollees
can be included in an issuer's MLR calculation under the amendment,
issuers will benefit for MLR calculation and reporting purposes only if
the savings are actually shared with enrollees. With respect to the
comment regarding self-insured ERISA plans, HHS notes that this
amendment does not apply to or impact, either self-funded ERISA plans,
or self-funded non-ERISA plans, as these plans are not subject to the
MLR reporting and rebate requirements under section 2718 of the PHS
Act. Last, with respect to comments regarding the NAIC recommendations
to HHS, section 2718(c) of the PHS Act directed the NAIC, subject to
certification by the Secretary, to establish uniform definitions and
standardized methodologies to guide MLR reporting and calculations. The
NAIC met its statutory obligation when it provided recommendations to
HHS in 2010 in the form of a model regulation.\224\ The NAIC's
recommendations informed the Secretary's decisions about the Federal
definitions and methodologies for calculating MLRs.\225\ In this
rulemaking, HHS is taking further action to recognize the special
circumstances of the different and newer plans that include ``shared
savings'' programs with the addition of new paragraph (b)(9) to 45 CFR
158.221.
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\224\ ``Regulation for Uniform Definitions and Standardized
Methodologies for Calculation of the Medical Loss Ratio for Plan
Years 2011, 2012, and 2013 per section 2718(b) of the Public Health
Service Act,'' MDL-190. Available at: https://www.naic.org/store/free/MDL-190.pdf?4.
\225\ See the Health Insurance Issuers Implementing Medical Loss
Ratio (MLR) Requirements Under the Patient Protection and Affordable
Care Act; Interim Final Rule, 75 FR 74864 (Dec. 1, 2010); see also
45 CFR part 158.
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Some commenters expressed concerns that ``shared savings'' programs
in general could actually compromise the quality of care by driving
consumer choices based on cost without regard for quality, and that
these programs could encumber and curtail medically necessary clinical
services in serving the financial interest of the payer. Some
commenters requested that HHS only allow ``shared savings'' where there
is evidence that the participating enrollees actually receive better
care at reduced costs. One commenter stated that the proposal fails to
define higher-value, which varies based on each enrollee's
circumstances. One commenter questioned the feasibility of measuring
whether reward systems generate actual savings.
[[Page 72249]]
HHS disagrees that programs that reward enrollees for critically
examining their options and pursuing cost-effective care interfere with
the provision of medically necessary clinical services. However, HHS
agrees that quality as well as cost should be determinants of what
qualifies for inclusion in any given issuer's ``shared savings''
program. That is why the amendment to 45 CFR 158.221 includes both a
cost and quality component; it permits issuers to include in the MLR
numerator ``shared savings'' payment made to enrollees choosing to
obtain care from a lower-cost and higher-value provider. However, HHS
did not propose and is not finalizing elements or criteria issuers must
address or otherwise include in their respective ``shared savings''
programs. The amendment finalized in this rulemaking is specific to
recognizing ``shared savings'' payments in issuer MLR calculations. As
detailed above, HHS believes state legislators and regulators are
currently in the best position to work with issuers in their states to
develop standards and criteria for ``shared savings'' programs for
their respective constituents. HHS further believes that issuers are in
the best position to perform the necessary provider credentialing
activities that will ensure that network providers that are included in
their ``shared savings'' programs are high-value, high-quality
providers. Since higher-value can vary by enrollee demographics and
provider type, issuers must determine what this means for their
enrollees and providers and maintain all documents and other evidence
necessary to support that determination consistent with the maintenance
of records requirements contained in 45 CFR 158.502. Issuers are
sophisticated entities that understand that if their enrollees obtain
lower-quality care, their costs over the long-term will increase rather
than decrease as their enrollees will likely need additional and
possibly corrective medical care. HHS therefore believes that issuers'
incentives are aligned with those of their enrollees when it comes to
designing ``shared savings'' programs.
HHS received a few comments urging that issuers be allowed to
include some or all of the costs of implementing the requirements of
these price transparency rules as a QIA in the numerator of the MLR
calculation. A few commenters urged HHS to allow issuers to include
some or all of the costs of creating the cost estimator tool required
by the price transparency aspects of the proposed rules.
Price transparency implementation costs do not constitute an
improvement to the quality of health care and thus do not qualify as
QIA and cannot be included in the numerator of the MLR calculation.
Lastly, several commenters expressed support for or opposition to
the MLR reporting and rebate requirements in general. HHS appreciates
these comments but notes that they are outside the scope of the
amendments to the MLR program rules contained in the proposed rule.
IV. Applicability
A. In General
1. Entities Subject to the Final Rules
The Departments proposed requiring group health plans, including
self-insured plans, and health insurance issuers of individual and
group health insurance coverage to disclose pricing information, with
certain exceptions as discussed in more detail in this preamble. The
Departments are of the view that consumers across the private health
insurance market will benefit from the availability of pricing
information that is sufficient to support informed health care
decisions. Although the Departments considered making the requirements
applicable to a more limited segment of the private health insurance
market, the Departments are of the view that consumers across the
market should receive and benefit from the same access to standardized,
meaningful pricing information and estimates. Moreover, applied
broadly, these changes have a greater potential to reform health care
markets.
Additionally, the preamble to the proposed rules discussed how
pricing information related to items and services that are subject to
capitation arrangements under a specific plan or contract could meet
transparency standards by disclosing only the consumer's anticipated
liability. The Departments sought comment on whether there are certain
reimbursement or payment models (such as ACOs or staff model HMOs) that
should be partially or fully exempt from these requirements or should
otherwise be treated differently. Further, the Departments sought
comment on how consumers may become better informed about their cost-
sharing requirements under these reimbursement or payment models.
The Departments also considered limiting applicability to issuers
of individual health insurance coverage and insured group health
insurance coverage, but concluded that limiting applicability would be
inconsistent with section 2715A of the PHS Act. The Departments are
concerned that a more limited approach might encourage plans and
issuers to simply shift costs to sectors of the market where the final
rules would not apply and where consumers have diminished access to
pricing information. Additionally, the Departments are concerned that a
more limited approach may distort the health care market by creating
perverse incentives for plans and issuers to avoid participating in
certain markets that require compliance with these requirements.
The Departments are aware that certain plans and health coverage
are not subject to the transparency provisions under section 2715A of
the PHS Act and, therefore, are not be subject to the final rules. This
includes grandfathered health plans, excepted benefits, health care
sharing ministries, and short-term, limited-duration insurance (STLDI).
Grandfathered health plans are health plans that were in existence
as of March 23, 2010, the date of enactment of PPACA, and that are only
subject to certain provisions of PPACA, as long as they maintain their
status as grandfathered health plans under the applicable rules.\226\
Under section 1251 of PPACA, section 2715A of the PHS Act does not
apply to grandfathered health plans. Therefore, the proposed rules
would not have applied to grandfathered health plans (as defined in 26
CFR 54.9815-1251, 29 CFR 2590.715-1251, and 45 CFR 147.140).
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\226\ 26 CFR 54.9815-1251, 29 CFR 2590.715-1251, and 45 CFR
147.140.
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In accordance with sections 2722 and 2763 of the PHS Act, section
732 of ERISA, and section 9831 of the Code, the requirements of title
XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code do
not apply to any group health plan (or group health insurance coverage
offered in connection with a group health plan) or individual health
insurance coverage in relation to its provision of excepted benefits.
Excepted benefits are described in section 2791 of the PHS Act, section
733 of ERISA, and section 9832 of the Code. Section 2715A of the PHS
Act is contained in title XXVII of the PHS Act, and, therefore, the
proposed rules would not have applied to a plan or coverage consisting
solely of excepted benefits.
The Departments also proposed that the rules would not apply to
STLDI. Under section 2791(b)(5) of the PHS Act, STLDI is excluded from
the definition of individual health insurance coverage and is therefore
exempt from section 2715A of the PHS
[[Page 72250]]
Act.\227\ Therefore, the proposed rules would not have applied to STLDI
coverage.
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\227\ See 26 CFR 54.9801-2, 29 CFR 2590.701-2, and 45 CFR
144.103.
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The Departments also proposed that the rules would not apply to
health reimbursement arrangements, or other account-based plans, as
defined in 26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-2711(d)(6)(i),
and 45 CFR[thinsp]147.126(d)(6)(i), that simply make reimbursements
subject to a maximum fixed dollar amount for a period, with the result
that cost-sharing concepts are not applicable to those arrangements.
In contrast, the Departments proposed that the final rules would
apply to grandmothered plans, meaning certain non-grandfathered health
insurance coverage in the individual and small group markets with
respect to which CMS has announced it will not take enforcement action
even though the coverage is out of compliance with certain specified
market requirements.\228\ The Departments sought comment on whether
grandmothered plans may face special challenges in complying with these
transparency reporting provisions and whether the proposed rules should
apply to grandmothered plans.
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\228\ Pate, R. ``Insurance Standards Bulletin Series.'' Centers
for Medicare & Medicaid Services. January 31, 2020. Available at:
https://www.cms.gov/files/document/extension-limited-non-enforcement-policy-through-calendar-year-2021.pdf.
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The final rules adopt these provisions as proposed. The final rules
apply these requirements to group health plans, and health insurance
issuers offering non-grandfathered group or individual health insurance
coverage, with certain exceptions. Thus, the final rules apply to
grandmothered plans. The Departments are finalizing, as proposed, that
these requirements will not apply to certain plans and coverages that
are not subject to the transparency provisions under section 2715A of
the PHS Act, including grandfathered health plans, excepted benefits,
and STLDI. Additionally, the final rules will not apply to health
reimbursement arrangements, or other account-based plans, as defined in
26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-2711(d)(6)(i), and 45
CFR[thinsp]147.126(d)(6)(i), as these account-based arrangements simply
make certain dollar amounts available, with the result that cost-
sharing and price setting concepts are not applicable to those
arrangements.
The majority of commenters supported applying these requirements to
issuers of individual health insurance coverage and group health
insurance coverage, as well as group health plans. Commenters supported
allowing consumers across the market to access important pricing
information. Some commenters suggested additional plans and coverages
that should be required to comply with these requirements, as discussed
later in this preamble. The Departments did not receive comments
regarding application of the final rules to grandmothered plans.
One commenter stated that the proposed rules would create an uneven
playing field that would unfairly advantage plans and issuers offering
stand-alone dental or vision coverage over plans that incorporate such
benefits into major medical coverage. For example, the commenter stated
that a plan offering essential health benefits would have to include in
a machine-readable file negotiated rates for pediatric dental services.
However, a plan offering stand-alone dental coverage would not have to
publish pricing information. For these reasons, the commenter
recommended that vision, dental, and hearing benefits, if offered as
part of a plan or coverage subject to the transparency requirements,
should be excluded from information disclosed through the internet-
based self-service tool and machine-readable files.
In response to this comment, the Departments note that section
2721(b), (c)(1) through (3) of the PHS Act provides an exemption from
title XXVII of the PHS Act for ``any individual coverage or any group
health plan (and group health insurance coverage offered in connection
with a group health plan) in relation to its provision of excepted
benefits.'' (See also section 732 (b), (c) of ERISA, and section
9831(b), (c) of the Code) (emphasis added).\229\ To the extent that a
plan or issuer provides a participant, beneficiary, or enrollee with
the opportunity to opt out of limited scope dental or vision benefits,
those benefits are considered as not an integral part of the plan and,
accordingly, are considered excepted benefits.\230\ Therefore, under
the final rules, plans and issuers that offer excepted benefits, such
as limited scope dental or vision benefits, along with their major
medical coverage are not required to disclose the information required
by the final rules regarding their provision of those excepted
benefits. Accordingly, the final rules do not create an uneven playing
field that would unfairly advantage plans and issuers offering stand-
alone dental or vision coverage over plans that incorporate such
benefits into major medical coverage.
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\229\ See also section 2763 of the PHS Act.
\230\ 26 CFR 54.9831-1(c)(3)(ii), 29 CFR 2590.732(c)(3)(ii), and
45 CFR 146.145(b)(3)(ii).
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The Departments received a mix of comments regarding whether the
final rules should apply to alternative contracting and alternative
payment model structures, such as ACOs or HMOs. One commenter
recommended a narrower scope for ACOs and other capitated payment
arrangements, including only requiring transparency tools to display
amounts that are not service dependent (for example, flat copayments),
as well as accumulator information about deductibles and out-of-pocket
maximums. As discussed elsewhere in this preamble, some commenters
expressed concern regarding how the final rules would apply to
reference-based pricing models, direct primary care, bundled or
capitated payment arrangements, and value-based insurance design.
Additionally, some commenters expressed concern regarding how the final
rules would apply to plans with rental networks and quality-adjusted
and risk-adjusted contracts (under which prices can only be calculated
after the fact). These commenters recommended that these kinds of
arrangements be exempt from the final rules' requirements.
On the other hand, other commenters suggested that there is no
justification for excluding plans that reimburse their providers based
on capitation from the requirements of the final rules as this would
result in an incomplete data set, and issuers of risk adjustment-
covered plans already assign values to services to administer benefits
with deductibles and co-insurance, for risk adjustment purposes under
45 CFR 153.710(c), and for internal reporting. One commenter
recommended that the final rules should apply to ACOs and other
capitated arrangements and that these arrangements should be required
to disclose their underlying financial incentive arrangements, not just
consumer's anticipated liability. The commenter also noted that any
exemptions may incentivize plans to move to these pricing models, which
the commenter characterized as opaque and potentially consumer-
unfriendly. Several commenters agreed that pricing information related
to items and services subject to capitation arrangements could meet
transparency standards only through the disclosure of the consumer's
anticipated liability.
Some commenters raised the concern that the proposed rules would
have a particularly negative impact on smaller entities that are less
likely to have the financial reserves and technological
[[Page 72251]]
resources to build and maintain systems to operationalize disclosure
requirements. Some commenters requested that the final rules be
optional or that smaller plans and TPAs be exempted from the
requirements. For example, a few commenters recommended providing an
exception to the price transparency requirement for small issuers,
TPAs, and plans with revenue below the $41.5 million small entity
threshold or with 100,000 commercial participants, beneficiaries, and
enrollees or fewer. They suggested that an exception to the final rules
would allow small issuers to adopt elements of the requirements of most
relevance to their participants, beneficiaries, and enrollees while not
forcing them to create a much more expensive option that may be of
limited appeal.
In considering these concerns, the Departments weighed the
competing goals of ensuring that consumers have access to pricing
information, the burden on plans, including self-insured plans, and
issuers of individual health insurance coverage and group health
insurance coverage, and encouraging innovative plan design. As
finalized, all issuers of non-grandfathered individual and group health
insurance coverage and self-insured plans (that are not account-based
plans), are required to comply with the final rules. Finalizing these
rules to be applicable to plans as proposed is the most straightforward
approach as it is impossible to define and predict all possible
modifications, plans, or models. Furthermore, doing so mitigates
creating incentives to adopt certain plan designs over others. The
Departments believe that this is not likely to stifle innovation.
Rather, the Departments are of the view that this approach creates a
level playing field for non-grandfathered individual and group health
insurance coverage and self-insured plans (that are not account-based
plans) to create innovative plan designs and increase consumers' access
to pricing information that is sufficient to support informed health
care decisions. The Departments are of the view that exempting plan
designs, such as alternative contracting and alternative payment model
structures, would create an opportunity for plans and issuers to avoid
sharing important pricing information with consumers. The Departments
maintain the view that consumers across the market should come to
expect and receive the same access to standardized, meaningful pricing
information and estimates for all plans affected by the final rules. In
addition, as detailed earlier in this preamble, issuers of risk
adjustment-covered plans that include capitation arrangements are
required under the final rules to submit a derived amount, potentially
using the same internal methodology the issuer uses to assign a price
value to the item or service for purposes of submitting risk adjustment
data under 45 CFR 153.710(c).
A few commenters supported exempting grandfathered health plans,
HRAs or other account-based plans, excepted benefits, and STLDI from
the proposed rules. However, a majority of commenters were concerned
that the final rules, as proposed, would not apply to plans or
arrangements that may have the highest potential cost-sharing
obligations, such as STLDI and health care sharing ministries. These
commenters were concerned that STLDI plans often have dollar limits on
covered benefits, limits on prescription drug coverage and covered
doctor visits, and excluded benefits, which often means consumers
enrolled in these plans can face higher cost-sharing liability when
seeking medical care than patients covered by individual health
insurance coverage, as defined under section 2791(b)(5) of the PHS Act.
They stated that it is even more important for these patients to have
access to their cost-sharing liability under the final rules before
receiving care or even signing up for a STLDI plan, so they are aware
of their coverage limits and are prepared to receive bills from the
hospital and other health care providers for amounts that exceed their
coverage. One commenter stated that whether such plans are considered
``individual health insurance'' is not relevant for such a
determination, as the proposed rules would not apply to just individual
health insurance, but would also apply to group coverage and
grandmothered plans.
The Departments appreciate the concerns raised by commenters
regarding these plans. However, the final rules adopt these policies as
proposed. As noted earlier in this section of this preamble, certain
types of coverage and arrangements such as STLDI, excepted benefits and
health care sharing ministries, are not subject to the transparency
provisions under section 2715A of the PHS Act and, therefore, are not
subject to the final rules. However, the Departments encourage all
plans that are not subject to the final rules to work to increase the
transparency and availability of pricing information, to enable
consumers to make informed health care decisions.
One commenter sought clarification of the liability of individual
employers concerning Multiple Employer Welfare Arrangements (MEWAs) and
Taft-Hartley plans. Section 715 of ERISA incorporates section 2715A of
the PHS Act into part 7 of ERISA. Generally, employers are only
responsible for ensuring compliance with the requirements of ERISA for
a Taft-Hartley plan (also known as a multi-employer plan), if they are
a member of the association, committee, joint board of trustees, or
other similar group of representatives of the parties who establish or
maintain the plan, or are otherwise a fiduciary of the plan. For MEWAs
that are employee welfare benefit plans, the bona fide group or
association that sponsors the MEWA assumes and retains responsibility
for operating and administering the MEWA, including ensuring compliance
with Part 7 of ERISA. In cases where the MEWA itself is not a plan,
each employer that provides benefits through a MEWA and, therefore,
maintains its own plan, is separately responsible for compliance with
ERISA requirements, and thus with the requirements of the final rules.
Some commenters recommended adding additional plans and coverages
to the list of health coverage not subject to these transparency
requirements. One commenter recommended adding expatriate health plans
because the Expatriate Health Coverage Clarification Act of 2014
exempts expatriate health plans from most of the provisions of PPACA,
including sections 1311(e)(3) of PPACA and section 2715A of the PHS
Act, both of which the Departments cite in asserting statutory
authority to propose these transparency requirements. Another commenter
recommended that Denominational Health Plans be specifically exempted
from the final rules. This commenter noted that Denominational Health
Plans can only offer coverage to a limited segment of the population--
eligible employees in the denomination--based on church requirements,
beliefs, and polity. Therefore, most of the individuals to which this
information would be disclosed would not be eligible to enroll in these
plans even if they wished to do so. Other commenters recommended
extending the final rules to health coverage to which 2715A of the PHS
Act does not apply. For example, a commenter recommended that the
Departments add Medicaid Managed Care Organization plans and Medicare-
Medicaid Plans to the list of health plans not subject to the
transparency requirements. The commenter noted that the combination of
Medicaid payment rates and low cost-sharing requirements limit the
[[Page 72252]]
usefulness of this information in the Medicaid context.
The Departments are finalizing the final rules as proposed and,
therefore, all plans subject to section 2715A of the PHS Act must
comply with these requirements. The Departments agree with commenters
that sections 1311(e)(3) of PPACA and 2715A of the PHS Act do not apply
to expatriate health plans \231\ and, therefore, such plans are not
subject to the requirements in the final rules. Furthermore, the
Departments' authority for the final rules derive from section 2715A of
the PHS Act, which only applies to group health plans and health
insurance issuers offering group or individual health insurance
coverage, and not Medicaid Managed Care Organization plans, Medicare-
Medicaid Plans, and Denominational Health Plans.
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\231\ 42 U.S.C. 18014.
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Interaction of Final Rules With 45 CFR 156.220
The Departments recognize that health insurance issuers offering
group or individual health insurance coverage as QHPs through an
Exchange are already subject to reporting requirements under 45 CFR
156.220 that implement the transparency in coverage requirements of
section 1311(e)(3) of PPACA. Pursuant to 45 CFR 156.220, issuers of
QHPs offered through an individual market Exchange or a Small Business
Health Options (SHOP) Exchange, including stand-alone dental plans,
must submit specific information about their plans' coverage to the
appropriate Exchange, HHS, and the state insurance commissioner, as
well as make the information available to the public in plain language.
The Departments acknowledge the similar purposes served by 45 CFR
156.220 and the final rules. The Departments, however, note the final
rules do not alter requirements under 45 CFR 156.220. Accordingly, QHP
issuers must comply with both rules' requirements. If necessary and to
the extent appropriate, HHS may issue future guidance to address QHP
issuers' compliance with both 45 CFR 156.220 and the final rules.
2. Applicability Dates
Except as otherwise provided for in the proposed MLR
requirements,\232\ the Departments proposed that all the proposed
requirements would become applicable for plan years (or in the
individual market, policy years) beginning on or after one year after
the finalization of the final rules. The Departments requested feedback
about this proposed timing. In particular, the Departments were
interested in information regarding the time necessary to develop cost
estimation tools and machine-readable files. The Departments are
finalizing a modified applicability timeline for the machine-readable
files at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-54.9815-2715A3, and 45
CFR 147.212. The requirements to publish the machine-readable files
will become effective for plan years (or in the individual market, for
policy years) beginning on or after January 1, 2022. The Departments,
in response to comments, are finalizing an applicability date that is
generally one-year later than the proposed applicability date for
complying with the internet-based self-service tool requirements.
Specifically, plans and issuers will be allowed to phase in the
requirements at 26 CFR 54.9815-22715A2, 29 CFR 2590.715-2715A2, and 45
CFR 147.211 regarding the items and services included in the internet-
based self-service tool. Plans and issuers will be required to provide
pricing information for a minimum of 500 items and services identified
by the Departments beginning with plan years (or in the individual
market, policy years) on or after January 1, 2023. Plans and issuers
will be required to provide the pricing information through the
internet-based self-service tool for all items and services by plan
years (or in the individual market, policy years) beginning on or after
January 1, 2024.
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\232\ As noted above, HHS proposed and finalized that the
amendment to the MLR regulation will become effective beginning with
the 2020 MLR reporting year (for reports filed by July 31, 2021).
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The Departments are finalizing applicability dates that do not tie
applicability timelines to the beginning of plan years (or in the
individual market policy years) that begin one year after the effective
date of the rules, as proposed. Because most plan and policy years
begin on January 1st, the Departments are of the view that this change
in the applicability date likely will not shorten the amount of time
plans and issuers have to comply with the machine-readable file
requirements, as it has been the Departments' intent, including under
the proposed rules, to require calendar year plans and policies to come
into compliance with the final rules by January 1, 2022. The changed
timeline is therefore unlikely to lead to increased burdens or costs.
The Departments are finalizing a 3-year applicability timeline for the
internet-based self-service tool requirements. Under the proposed
rules, plans and issuers would have had to comply with all relevant
proposed requirements beginning with plan or policy years beginning on
or after January 1, 2023. Under the final rules, full compliance with
all requirements associated with the internet-based self-service tool
will not be required until plan or policy years beginning on or after
January 1, 2024. For these reasons, the final rule's applicability
dates for the self-service tool requirements are also unlikely to lead
to increased burdens or costs.
Many commenters submitted comments regarding the proposed
applicability date of the proposed rules. The majority of commenters
strongly recommended delaying the proposed applicability date for the
internet-based self-service tool and machine-readable file requirements
of the rules for at least one year and up to five years from
publication of the final rules.
Commenters recommended delaying the applicability date of the final
rules because complying with the requirements will require negotiations
with administrative service providers, and the design, building, and
testing of websites. Other commenters cited the challenges in accessing
some of the required information from third parties and the technical
challenges plans will likely face as additional reasons to delay the
applicability dates of these requirements. Additionally, commenters
noted that the proposed rules would require disclosure of large volumes
of data, which will have to be coordinated among various parties and
for which systems will need to be put into place to ensure timely,
accurate disclosure. Some commenters noted that a delay would be needed
due to complex operational and compliance issues related to contracting
with TPAs, ownership of data, and building and operating new IT
systems.
Commenters also cited vendor supply/demand challenges; extensive
technology design, development, and deployment work; amending
agreements with third parties; financing required to meet the
requirements of the final rules; and time needed to test the tools for
consumer use as reasons to delay the applicability date. One commenter
noted that their current price estimator tools took considerable time
and resources to develop, and large portions of a tool's underlying
logic or feature set may not be compatible with the approach envisioned
in the proposed rules. Moreover, testing, evaluating, and resolving
these types of issues will require significant investment in IT
development, numerous iterations of quality assurance and consumer
testing, extensive education and training for plan staff, and
development of new consumer-facing materials, among other
[[Page 72253]]
challenges. Another commenter recommended that employers/plan sponsors
should not have to comply with the final rules until the first day of
the first plan year that is two years after the date on which the rules
are published. Similarly, commenters requested a lengthy phase-in
period to give employers, third parties, issuers, and health care
providers time to modify their contractual agreements to provide all of
the data the proposed rules would require to be disclosed.
A few commenters stated the Departments severely underestimated the
time needed to implement the machine-readable files. The commenter
noted that the timeline to implement the machine-readable files is very
short, which could compromise the integrity of the files and lead to
unintended consequences for consumers. Another commenter noted that, if
not eliminated, the requirement to make machine-readable files
available should be applicable no earlier than plan or policy years
beginning three years after the date the rules are finalized.
As discussed in the economic impact analysis, the Departments are
of the view that developing the machine-readable files should be
straightforward for most plans and issuers and that plans and issuers
will incur limited additional administrative burdens or costs after the
one-time initial file development. The development activities needed to
establish the machine-readable files involve gathering, formatting, and
making publicly available already existing data that plans and issuers
use in their everyday operations. Plans and issuers need to keep this
information current for operational purposes, and the additional costs
and burdens of ensuring that the machine-readable files are updated
monthly is expected to decrease in subsequent years and ultimately
become minimal, as the Departments expect plans and issuers to automate
the updating and verification processes in the years following initial
development.
The Departments are of the view that providing for a phased-in
approach with regard to the number of items and services required for
the internet-based self-service tool will provide more time for plans
and issuers to plan for any increased costs, work with various vendors,
perform user testing, and build appropriate technology to handle the
disclosure of data through the internet-based self-service tool.
Therefore, the final rules require plans and issuers to include in the
internet-based self-service tool (and by request, through the paper
method) 500 items and services identified by the Departments for plan
years (in the individual market, for policy years) beginning on or
after January 1, 2023, and all items and services for plan years (in
the individual market, for policy years) beginning on or after January
1, 2024. The Departments are of the view that providing more time to
implement the internet-based self-service tool while generally
maintaining the timeline for the machine-readable files, strikes the
appropriate balance between minimizing burdens for issuers and
maximizing price transparency for the public. Providing information to
the public through the machine-readable files sooner will also
accelerate researchers' and third-party developers' access to pricing
information and potentially provide additional resources and incentives
for plans to build out their own consumer-tools.
Many commenters also encouraged the Departments to allow for a
phased-in approach for the internet-based self-service tool and
machine-readable files. Some commenters suggested finalizing a rule
that allows for a phased-in approach for different group health plans
and health insurance issuers of individual and group health insurance
coverage to come into compliance with the final rules. Some commenters
recommended finalizing a rule that allows for a phased-in approach by
allowing smaller entities an extended implementation timeframe (that
is, an additional 3 to 5 years) due to the disproportionate IT burden
that will be placed on these smaller entities. Additionally, commenters
were concerned that the rules may create a competitive advantage for
larger issuers and TPAs.
A few commenters recommended that the rules be implemented in a
more gradual fashion by requiring a price transparency tool that covers
a narrower data set initially, for example, one that includes only the
most common shoppable services. These commenters asserted that, over
time, this scope could be broadened to be fully inclusive, but an
initial narrow focus could increase the chance that patients have
critical, actionable information as soon as possible.
Other commenters recommended a phased approach that would focus
first on the functionality providing the most value to consumers to
establish a baseline standard of price transparency across plans, while
allowing time for the industry to solve more difficult technical
challenges. Another commenter recommended allowing employers that have
highly customized benefit structures additional time to implement the
internet-based self-service tool. One commenter recommended allowing
for a transition period for issuers and plans to use their current
tools to meet the requirements.
A few commenters recommended including quality metrics. These
commenters noted that requiring quality information in the disclosures
would take additional time. In particular, one commenter was concerned
that in the absence of quality data, price transparency could actually
increase spending. The commenter therefore recommended delaying the
implementation of the final rules until quality information, such as
information related to patient satisfaction and experience, adherence
to clinical standards and evidence-based medicine, and patient safety
and clinical outcomes, could be incorporated. Another commenter stated
that, if pharmacy quality information could be included, the
Departments would need to provide for several years to transform
existing consensus-based processes to identify appropriate quality
metrics to include health plans serving different populations. Another
commenter urged the Departments to perform a study on the effects of
price transparency and the potential consequences on consumers seeking
care to better understand how best to integrate quality information
alongside prices to allow consumers to evaluate the services that best
respond to their individual needs.
As the Departments explain in section II.C.1 of this preamble,
government and private sector actors are working to develop and
implement reliable and reasonable quality measures that can be applied
to produce quality rating information that consumers may access and
consider alongside pricing. As commenters acknowledged, delaying the
final rules for the purpose of requiring the integration of quality
information with price information would require several additional
years. While the Departments appreciate the value of quality
information to informed health care decision-making, the Departments
are of the view that price transparency in health coverage must not be
delayed for years when some quality information is already available or
under development. Indeed, the Departments expect that the ready
availability of pricing information will create greater consumer
interest in quality information and other data relevant to health care
decision-making, and that the market will respond to provide such
information through innovative resources such as online tools and
mobile applications. The Departments anticipate that innovators will
seek ways to best present and
[[Page 72254]]
integrate pricing and quality data. However, the Departments also will
consider what next steps are appropriate and feasible within the
Departments' current authorities, including the possibility of
conducting a study to evaluate how to best integrate quality
information alongside prices. For these reasons and those noted earlier
in this preamble, the Departments decline to require plans and issuers
to include quality information in the disclosures required by the final
rules.
The Departments are finalizing the applicability dates of the final
rules as described earlier in this preamble. The Departments are of the
view that the additional time and flexibility regarding the internet-
based self-service tool will help address the concerns commenters
raised regarding smaller entities' ability to comply with these
requirements.
B. Enforcement and Good Faith Special Applicability
The preamble to the proposed rules did not discuss how the proposed
rules would be enforced. State regulators, in their comments to the
proposed rules, sought greater clarity on how the proposed rules'
requirements would be enforced as specifically applied to health
issuers in the individual and group markets. Section 1311(e)(3) is
located in title I of PPACA and, under section 1321(c)(2) of PPACA is
subject to the enforcement scheme set forth in section 2723 of the PHS
Act. Similarly, section 2715A of the PHS Act is subject to the
enforcement scheme set forth in section 2723 of the PHS Act. Therefore,
states will generally be the primary enforcers of the requirements
imposed upon health insurance issuers by the final rules.\233\ The
Departments expect to work closely with state regulators to design
effective processes and partnerships for enforcing the final rules.
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\233\ DOL has jurisdiction to enforce the final rules as they
apply to group health plans subject to ERISA. Treasury has
jurisdiction over certain church plans. HHS has jurisdiction over
non-Federal governmental plans and over health insurance issuers
where the HHS Secretary determines that a state has failed to
substantially enforce the requirements. OPM has jurisdiction over
the Federal Employees Health Benefits Plans.
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The proposed rules included a special applicability provision to
address circumstances in which a group health plan or health insurance
issuer, acting in good faith, makes an error or omission in its
disclosures. Specifically, a plan or issuer would not fail to comply
with the proposed rules solely because it, acting in good faith and
with reasonable diligence, made an error or omission in a disclosure,
provided that the plan or issuer corrects the information as soon as
practicable. Additionally, to the extent such an error or omission was
due to good faith reliance on information from another entity, the
proposed rules included a special applicability provision under which,
to the extent compliance would require a plan or issuer to obtain
information from any other entity, the plan or issuer would not fail to
comply with this section because it relied in good faith on information
from the other entity, unless the plan or issuer knew, or reasonably
should have known, that the information was incomplete or inaccurate.
Under the proposed rules, if a plan or issuer had knowledge that such
information was incomplete or inaccurate, the plan or issuer would be
required to correct the information as soon as practicable.
Furthermore, the proposed rules also included a special
applicability provision to account for circumstances in which a plan or
issuer fails to make the required disclosures available due to its
internet website being temporarily inaccessible. Accordingly, the
proposed rules provided that a plan or issuer would not fail to comply
with this section solely because, despite acting in good faith and with
reasonable diligence, its internet website is temporarily inaccessible,
provided that the plan or issuer makes the information available as
soon as practicable.
The Departments solicited comments regarding whether, in addition
to these special applicability provisions, additional measures should
be taken to ensure that plans and issuers that have taken reasonable
steps to ensure the accuracy of required information disclosures are
not exposed to liability by virtue of providing such information as
required by the proposed rules.
In general, commenters supported the good faith special
applicability provisions (also referred to as ``safe harbors'') and
recommended certain clarifications. One commenter requested
clarification regarding how the Departments would determine whether a
plan or issuer acted in ``good faith'' and with ``reasonable
diligence.'' Another commenter requested additional guidance on what it
would mean to ``correct'' information, and specifically whether this
requirement would apply on a prospective or retrospective basis.
Another commenter recommended the Departments allow health plans 30
days to update accumulated amounts in the internet-based self-service
tool.
The Departments are finalizing the ``good faith'' safe harbor as
proposed. While ``good faith'' is not explicitly defined in the final
rules, it is an established legal and business term that is generally
understood to involve honesty in fact and the observance of reasonable
commercial standards of fair dealing, according to the Uniform
Commercial Code.\234\ Efforts to correct omitted or erroneous
information should proceed promptly after the plan or issuer is
informed of the error. At a minimum, correcting information should
include replacing the incorrect information, and may include notifying
those affected of the error and the correction, using digital or
written communications to notify affected participants, beneficiaries,
and enrollees, and posting a notice on the internet website of the
expected time before the error will be corrected.
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\234\ ``Uniform Commercial Code. General Definitions.'' Cornell
Law School Legal Information Institute. Available at: https://www.law.cornell.edu/ucc/1/1-201#Goodfaith.
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The Departments received few comments on the good faith special
applicability provision to account for circumstances in which a plan or
issuer fails to make the required disclosures available due to its
internet website being temporarily inaccessible. One commenter
recommended that the website inaccessibility safe harbor be expanded to
cover situations in which the internet-based self-service tool or
machine-readable files are temporarily inaccessible, including because
the internet website is inaccessible. This clarification would cover
other technical issues, for example, that may affect only these
resources, even though the remainder of the issuer's or plan's website
is accessible.
Several commenters recommended that the Departments expand the
``safe harbor'' to account for additional circumstances. Commenters
recommended that a safe harbor be created for plans that do not have
direct access to negotiated in-network rates and allowed amounts, or
information regarding reference based re-pricing in real time, and that
may be unable to obtain some of the required information despite good
faith efforts. For example, commenters recommended exempting employers,
plan sponsors, and self-insured plans that rely on TPAs from liability
if they have made good faith efforts to obtain the required data but
have failed to do so. Commenters also recommended exempting plan
sponsors that have been unable to procure third-party vendors from
liability if these plans sponsors have acted in good faith. One
commenter recommended that the Departments finalize a good faith
special applicability provision to protect
[[Page 72255]]
health plans and issuers that provide cost estimates that meet the
requirements of the final rules if the estimates do not match the
amounts actually paid by participants, beneficiaries, or enrollees.
This commenter also requested that this safe harbor be extended to the
cost-sharing estimate requirements.
Commenters also recommended that the Departments consider a safe
harbor provision for covered entities that clearly provides that
issuers and plans are not responsible for the downstream privacy and
security of PHI shared by a participant, beneficiary, or enrollee with
a third-party application consistent with the recent guidance issued by
the HHS OCR.\235\ Another commenter recommended the creation of
additional safe harbor provisions to allow and encourage health care
organizations to share threat information about security risks and
incidents linked to third-party applications.
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\235\ ``HHS FAQ.'' United States Department of Health and Human
Services. Available at: https://www.hhs.gov/hipaa/for-professionals/faq/3009/does-a-hipaa-covered-entity-bear-liability.html.
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One commenter noted that disclosure of pricing information through
the machine-readable files and cost-sharing tool raises concerns for
plan sponsors about the potential for increased litigation under ERISA
based on the release of payer-specific negotiated rates. The commenter
encouraged DOL to effectively and expressly address this issue so that
any disclosure requirement is crafted in a way that does not increase
fiduciary liability for employer plan sponsors. The commenter
recommended that DOL consider proposing a ``safe harbor'' to protect
employers from downstream litigation risk related to the public
disclosure of negotiated rates and disclosure of negotiated rates
through the cost-sharing tool. Such a ``safe harbor'' could provide
that so long as an employer can demonstrate it ``considered''
negotiated rates as part of its decision-making process in selecting an
administrative service organization (ASO) for its plan, so that it
would not be deemed to have acted imprudently as a fiduciary for
purposes of ERISA with respect to the selection of the ASO by virtue of
the negotiated rates. While the Departments appreciate this comment
regarding increased litigation under ERISA, this request is beyond the
scope of this rulemaking.
Finally, several commenters requested a deemed compliance standard
for employers or plans that already offer transparency tools designed
to assist participants with cost estimates and obtaining up-to-date
cost-sharing information or for plans and issuers that voluntarily
submit their data to multi-payer claims databases. Other commenters
noted that some existing state laws require plans to provide the
ability for enrollees to look up their out-of-pocket costs for several
hundred procedures online or by phone. These commenters recommended--to
reduce burden on issuer implementation and avoid duplication of
effort--that health plans that comply with existing state laws
requiring treatment cost-estimator functionality be deemed in
compliance with any similar Federal requirements. Another commenter
recommended this safe harbor be extended to the machine-readable files.
The Departments understand that states have been at the forefront
of transparency initiatives and some have required disclosure of
pricing information for years. However, it is important to note that
states do not have authority to require such disclosures by plans
subject to ERISA, which compose a significant portion of the private
market.\236\ As a result, a significant portion of consumers do not
have access to information on their plans, even in states that have
implemented transparency requirements. The Departments are also aware
that many plans and issuers have moved in the direction of increased
price transparency. Despite these price transparency efforts, the
Departments understand that there continues to be a lack of easily
accessible pricing information for consumers to use when shopping for
health care services. The final rules are meant, in part, to address
this lack of easily accessible pricing information, and represent a
critical part of the `Departments' overall strategy for reforming
health care markets by promoting transparency, competition, and choice.
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\236\ Panis, C. W. A., and Brien, M. J. ``Self-Insured Health
Benefit Plans 2019: Based on Filings through Statistical Year
2016.'' Deloitte. January 7, 2019. Available at: https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2019-appendix-b.pdf.
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The Departments will take these additional safe harbor
recommendations into consideration for future rulemaking. The
Departments are not including in the final rules any safe harbor rule
that would substitute the offering of existing tools or compliance with
existing state transparency laws. The Departments have concluded that
additional price transparency efforts are necessary to empower
consumers, promote competition in the health care industry, and reduce
the overall rate of growth in health care spending. The additional safe
harbors recommended by commenters would not allow for the consistent
baselines and standards that the Departments seek to establish with the
final rules. As noted above, one of the goals of the final rules is to
empower plans and issuers in the commercial health care market to
innovate and compete in an industry where innovation and competition
currently appear to be limited. By requiring public disclosure of
pricing data a year after the effective date of the rules, the final
rules will encourage issuers, TPAs, and third-party developers and
innovators to create or enhance their shopping tools, including the
self-service tools also required by these final rules. The development
of these tools in turn will create additional consumerism, which will
lead to lower prices throughout the health care market. This impact is
only achievable, however if all applicable plans and issuers are held
to the same standards and timelines. Furthermore, limiting the
applicability of the final rules would undermine the Departments'
overall strategy for reforming health care markets by promoting
transparency, competition, and choice across the health care industry.
The Departments are of the view that, ultimately, plans and issuers
are responsible for complying with the requirements outlined in the
final rules. The Departments understand that plans may have to make
adjustments to their contracts and as such, the Departments have
factored that into the burden estimates and timing requirements for
implementation explained elsewhere in the final rules. As plans and
issuers are responsible for complying with the requirements outlined in
the final rules, they should carefully examine the capacity of any
partners they may contract with to provide the required information.
Finally, as discussed earlier in this preamble, the Departments
recognize the privacy concerns raised by commenters, but are of the
view that the final rules, which include an exemption for providers
with fewer than 20 different claims for payment and do not require any
disclosure of PII or PHI through an API, and the continuing obligation
of plans and issuers to comply with applicable privacy requirements, do
not raise sufficient privacy concerns to require an additional privacy-
related safe harbor.
V. Economic Impact Analysis and Paperwork Burden
A. Summary/Statement of Need
This regulatory action is taken, in part, in light of Executive
Order 13877
[[Page 72256]]
directing the Departments to issue an ANPRM, soliciting comments
consistent with applicable law, requiring providers, health insurance
issuers, and self-insured group health plans to provide or facilitate
access to information about expected out-of-pocket costs for items or
services to patients before they receive care. As discussed previously
in this preamble, in response to Executive Order 13877, the Departments
published the proposed rules entitled ``Transparency in Coverage.''
Despite the growing number of initiatives and the growing consumer
demand for, and awareness of, the need for pricing information, there
continues to be a gap in easily accessible pricing information for
consumers to use to shop for health care items and services. The final
rules add new requirements to 26 CFR part 54, 29 CFR part 2590, and 45
CFR part 147 aimed at addressing this gap, and are a critical part of
the Administration's overall strategy for reforming health care markets
by promoting transparency and competition, creating choice in the
health care industry, and enabling consumers to make informed choices
about their health care. As discussed later in the RIA, the Departments
acknowledge that more than 90 percent of plans, issuers, and TPAs
currently provide some form of internet-based self-service tool to
their consumers. However, as stated in section I.B of the final rules,
the Departments understand that utility and accuracy among existing
issuer cost estimator tools varies widely. Based on issuer
demonstrations of their tools given to the Departments, some estimators
reflect a combined range of possible costs; others give estimates based
off historical pricing or claims data from various sources, while
others are restricted in the types of procedures they include.
Moreover, some existing issuer tools do not take into account a
participant's, beneficiary's, or enrollee's accumulators.\237\ The
Departments are of the view that it is important to establish a minimum
set of standards of what is acceptable so that consumers can take
advantage of the information market-wide. Consistency will give
consumers confidence that the information presented by these tools will
not change arbitrarily. Reliability assures consumers that information
in these tools accurately reflects plans' and issuers' best estimates
of costs. The availability of these tools across all markets will
ensure that no participant, beneficiary, or enrollee is denied access
to the benefits of this rule and the Departments are of the view that
this consistency is vital for success and utilization. As discussed
previously in section I.B, state transparency requirements are
generally not applicable to self-insured group health plans, and as a
result, a significant portion of consumers may not have access to
information on their plans and their health care costs. The Departments
encourage additional functionality and innovation to be built around
the requirements of the final rules, but believe a baseline is required
to give the participant, beneficiary, or enrollee some confidence that
no matter which plans tool they used, it would at least offer the same
basic information. By requiring group health plans and health insurance
issuers to disclose to participants, beneficiaries, or enrollees such
individual's cost-sharing information for covered items or services
furnished by a particular provider, the final rules provide them
sufficient information to determine their potential out-of-pocket costs
related to needed care and encourages them to consider price when
making decisions about their health care.
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\237\ See also ``Are healthcare's cost estimate tools making
matters worse for patients?'' Becker's Hospital CFO Report.
Available at https://www.beckershospitalreview.com/finance/are-healthcare-s-cost-estimate-tools-making-matters-worse-for-patients.html (citing Gordon, E. ``Patients Want To Price-Shop For
Care, But Online Tools Unreliable.'' NPR. November 30, 2015.
Available at https://www.npr.org/sections/health-shots/2015/11/30/453087857/patients-want-to-price-shop-for-care-but-online-tools-unreliable) (``Some estimators reflect a combined range of possible
costs, while others are based off historical pricing or claims data
from various sources. Many online estimate tools are restricted in
the types of procedures they include. . . .'').
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B. Overall Impact
The Departments have examined the impact of the final rules as
required by Executive Order 12866 on Regulatory Planning and Review
(September 30, 1993), Executive Order 13563 on Improving Regulation and
Regulatory Review (January 18, 2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 202 of the Unfunded
Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104-4), Executive
Order 13132 on Federalism (August 4, 1999), the Congressional Review
Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation
and Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
A regulatory impact analysis (RIA) must be prepared for rules with
economically significant effects ($100 million or more in any 1 year).
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) Having an annual effect on the economy of $100 million or more in
any 1 year, or adversely and materially affecting a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local or tribal governments or communities
(also referred to as ``economically significant''); (2) creating a
serious inconsistency or otherwise interfering with an action taken or
planned by another agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive order. An RIA
must be prepared for major rules with economically significant effects
($100 million or more in any 1 year), and a ``significant'' regulatory
action is subject to review by the Office of Management and Budget
(OMB). The Departments have concluded that the final rules are likely
to have economic impacts of $100 million or more in at least 1 year,
and, therefore, meet the definition of ``economically significant
rule'' under Executive Order 12866. Therefore, the Departments have
provided an assessment of the potential costs, benefits, and transfers
associated with the final rules. OMB reviewed this regulation in
accordance with the provisions of Executive Order 12866.
Two commenters suggested that the proposed rules failed to comply
with Executive Order 12866. Executive Order 12866 defines rules likely
to have an economic impact in excess of $100 million as ``significant''
and requires that the agencies conduct an assessment of potential
costs. The commenters suggested that the economic impact analysis and
cost assessment the agencies provided for the proposed rules were short
of the concrete, well-founded analysis required of the economic
analysis directed by Executive Order 12866 that must accompany a
proposed rulemaking as far-reaching, and potentially costly, as the
proposed rules. One commenter suggested that the proposed rules were
inconsistent with
[[Page 72257]]
both Executive Order 12866 and Executive Order 13563, both of which
direct agencies to carefully consider alternatives to regulations an
agency has deemed necessary, and to select the least burdensome
approach available. The commenter maintained that the agencies did not
adequately consider alternatives and are proposing an unnecessarily and
excessively burdensome approach.
After consideration and discussion of the comments related to
proposed cost estimates received in response to the proposed rules, the
Departments chose to reevaluate the cost estimates associated with the
provisions in the final rules. The Departments also consulted with
internal and external IT professionals to gain a better insight into
what individuals and tasks would be needed to design, develop, and
deploy the internet-based self-service tool and the three machine-
readable files required by the final rules. Based on this consultation
and additional research, the Departments have chosen to increase the
cost estimates to account for the updated understanding of the costs
posed by the final rules, as well as the additional requirements
included in the final rules. The Departments further discuss changes to
the final cost estimates later in this preamble and in the associated
ICR sections.
The final rules will enable participants, beneficiaries, and
enrollees to obtain information about their potential cost-sharing
liability for covered items and services that they might receive from a
particular provider by requiring plans and issuers to disclose cost-
sharing information as described at 26 CFR 54.9815-2715A2, 29 CFR
2590.715-2715A2, and 45 CFR 147.211. As discussed earlier in section
I.B. of the final rules, there has been a shift in the health care
market from copayments to coinsurance. Coupled with increases in plans
and coverages with high deductibles, generally requiring sizeable out-
of-pocket expenditures prior to receiving coverage under the terms of
the plan or policy, participants, beneficiaries, and enrollees are now
shouldering a greater portion of their health care costs than before.
For example, over the period from 2008 to 2018, the average health care
costs incurred by families covered by large employers--including
premium contributions and out-of-pocket spending on health care
services--have increased 67 percent from $4,617 to $7,726 annually.
Over the same period, the average out-of-pocket costs alone have
increased from $1,779 to $3,020 annually.\238\ The Departments are of
the view that disclosure of pricing information is crucial for
participants, beneficiaries, or enrollees to engage in informed health
care decision-making and believe that with greater price transparency
and access to more accurate and actionable pricing information,
participants, beneficiaries, and enrollees will be able to consider the
value of an item or service when making decisions related to their
health care.
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\238\ Rae, M., Copeland, R., and Cox, C. ``Tracking the rise in
premium contributions and cost-sharing for families with large
employer coverage.'' Peterson-KFF. August 14, 2019. Available at:
https://www.healthsystemtracker.org/brief/tracking-the-rise-in-premium-contributions-and-cost-sharing-for-families-with-large-employer-coverage/?utm_campaign=KFF-2019-Health-Costs&;amp;utm_medium=email&_hsenc=p2ANqtz-
_72_RHB9Twe8BpbqOg28rdlGqxq_SBgV6rB-
kbC4PuYMItIOSxHQLmh_D3OH4GOnUKZXa8&utm_source=hs_email&am
p;hsCtaTracking=04848753-3235-436e-a0de-ae8238ad00ad%7Cc1097ae0-
0521-4e9a-8e45-e5a87f67af4a.
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In addition, as described at 26 CFR 54.9815-2715A1, 54.9815-2715A2,
and 54.9815-2715A3, 29 CFR 2590.715-2715A1, 2590.715-2715A2, and
2590.715-2715A3, and 45 CFR 147.210, 147.211 and 147.212, the final
rules require group health plans and health insurance issuers to make
public in-network rates, including amounts in underlying fee schedules,
negotiated rates, and derived amounts for in-network providers;
historical allowed amounts paid to out-of-network providers and billed
charges for all covered items and services; and negotiated rates and
historical net prices for prescription drugs. The Departments are of
the view that these requirements, through providing greater
transparency and access to pricing information, will provide
consistency and confidence across all internet-based self-service
tools. Access to data provided by the three machine-readable files will
ensure that all consumers have the pricing information they need in a
readily accessible format, which could inform their choices, in
addition to potentially impacting cost disparities and improvements to
the overall functioning of the health care market. The Departments are
of the view that greater price transparency and the availability of
price information to the public will empower the 26.1 million uninsured
consumers \239\ to make more informed health care decisions and allow
consumers who wish to shop among plans and coverage options to better
understand the potential cost of their care. Public availability of
this information will also allow third-party IT developers to provide
consumers with more accurate information on provider, plan, and issuer
value, as well as prescription drug pricing information, ensuring that
such information is available to consumers where and when it is needed.
Furthermore, providing the in-network rates along with out-of-pocket
costs will also show what future costs could be for a participant,
beneficiary, or enrollee for the same service, depending on the
progress of his or her deductible. This information will help consumers
make informed decisions related to their health care needs now and in
the future.
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\239\ ``Income, Poverty and Health Insurance Coverage in the
United States: 2019.'' United States Census Bureau. September 15,
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
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The Departments received many comments regarding the underlying
economic principles of the proposed rules. Many commenters were
concerned the rules as proposed could disrupt contract negotiations
between providers and health plans and result in providers acting in
anticompetitive ways (such as collusion, consolidation, or price
fixing), resulting in increased rates (a so-called ``race to the
top''). Some of these commenters were particularly concerned with the
potential of the Departments' proposals to spur anticompetitive
behavior in highly concentrated markets. Several of these commenters
cited the FTC's concerns about the potential negative impacts of price
transparency on competition in the health insurance markets, including
the possibility that providers (or sellers) will coordinate their
behavior or bid less aggressively, leading to higher prices. Commenters
also cited similar concerns expressed by the Department of Justice
(DOJ) and the Congressional Budget Office (CBO) about the unintended
consequences of releasing competitive proprietary information such as
the in-network rates of plans and issuers. Commenters further stated
increased costs would negatively impact consumer choice and reduce the
affordability of health insurance coverage of low- and middle-income
consumers. One commenter expressed concern that plans and issuers could
also coordinate to reduce provider payment levels below market
competitive rates, which could negatively impact patient access to
quality care. In contrast, one commenter suggested that concerns about
potential collusion among providers are unfounded as local markets are
currently populated by a limited number of providers who tend to have
knowledge of each other's rates and
[[Page 72258]]
consumers currently receive pricing information through EOBs. The
commenter also expressed the opinion that the argument put forth by
issuers that in-network rates are trade secrets is self-serving and
benefits them at the expense of consumers and the public.
One issuer stated that its experience in state markets where health
care price transparency was implemented (Massachusetts, New Hampshire,
and Maine) do not provide evidence that transparency efforts produce
reduced health care prices and that state price transparency efforts
negatively affected issuers' ability to negotiate lower rates. However,
another commenter cited a study of the New Hampshire transparency
initiative that found ``a significant reduction in negotiated prices.''
\240\
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\240\ Brown Z. Y. ``Equilibrium Effects of Health Care Price
Information.'' 101 Review of Economics & Stat. 699 (2019). Available
at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
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Some commenters suggested that the Departments should ensure that
strong protections are in place to prevent price fixing or
unsustainably low reimbursement for care before requiring public
disclosure of in-network and out-of-network rates. For example, to
address concerns about price fixing, one commenter suggested working
closely with the FTC and other appropriate Federal and state
authorities to monitor health care provider markets for any incidence
of collusion, potentially leading to the prosecution of entities for
violations that raise costs for patients and plan sponsors.
By contrast, several commenters expressed the view that the public
disclosure of payer-specific in-network rates and transparency would
promote competition in the health insurance markets and will drive down
costs, which could result in lower, more reasonable health care prices.
One commenter cited a paper that reviewed outcomes after the
implementation of price transparency efforts and found evidence for
behavioral changes that could place pressure on providers to lower
rates.\241\ Specifically, the paper found evidence of shopping activity
among consumers, especially younger consumers, evidence of development
activity by third-party application developers using this information,
and evidence that employers will use the data to negotiate better
rates. Another commenter noted that employers and health plans would be
able to leverage the information to negotiate rates that are more
reasonable and encourage patients to access higher-value providers.
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\241\ Blase, B. ``Transparent Prices Will Help Consumers and
Employers Reduce Health Spending.'' Texas Public Policy Foundation.
September 27, 2019. Available at: https://galen.org/assets/Blase_Transparency_Paper_092719.pdf.
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As noted previously in sections I.B and I.C of this preamble, the
Departments are of the view that greater price transparency and the
public disclosure of pricing information is necessary to enable
consumers to use and understand pricing data in a manner that will
increase competition, improve markets, reduce disparities in health
care prices, and potentially lower health care costs. The Departments
continue to be of the view that effective downward pressure on health
care pricing cannot be fully achieved without increased price
transparency and the public disclosure of pricing information. As
discussed in section E.3 of this preamble, the Federal Government
maintains laws and processes to investigate reports of collusive or
other anticompetitive practices.
Section 1311(e)(3) of PPACA and section 2715A of the PHS Act, as
well the authority vested in the Departments, grant participants,
beneficiaries, enrollees, and the public the right to know the prices
of health care items and services, which will enable them make informed
health care purchasing decisions. Without access to price information,
consumers are unable to accurately assess and choose the least costly
care and coverage options among all available options, and choice
cannot be meaningful without adequate information about those choices.
Currently, insured participants, beneficiaries, or enrollees, as well
as uninsured consumers, do not have access to adequate and accessible
pricing information related to care and coverage. The potential benefit
of consumer access to this information is enormous. Furthermore, the
Departments are aware of consumer demand for this information.
According to a May 2019 poll conducted by the Harvard Center for
American Political Studies, 88 percent of U.S. registered voters (out
of a sample of 1,295) stated they would support an initiative by the
government to mandate issuers, hospitals, doctors and other providers
to disclose the cost of their services and discounted or negotiated
rates between these groups.\242\ Furthermore, 65 percent of these
individuals would favor these initiatives even if in the short term
they lead to an increase in prices by some providers.\243\ The vast
majority of comments the Departments received in response to the
proposed rules were from individuals who expressed general support for
the transparency proposals and expressed frustration at the lack of
information available about health care pricing and a desire to have
access to this information.
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\242\ ``The CAPS Harris Poll.'' Harvard Center for American
Political Studies, 45. May 2019. Available at: https://harvardharrispoll.com/wp-content/uploads/2019/06/HHP_May19_vF.pdf?utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz--NgSdTYggGUP4tWyR2IEQ7i8TCg1s3DcHuQyhErIgkX3KFUi3SFgl9OZKm4-JUOOi9tmMQ.
\243\ Id.at 46.
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As noted in the preamble to the proposed rules and earlier in this
preamble, the belief that greater price transparency will reduce health
care costs by encouraging providers to offer more competitive rates is
consistent with the predictions of standard economic theory and a
number of empirical studies regarding price transparency in other
markets. The Departments agree, however, that the health care market
presents unique challenges. The Departments reviewed a study that notes
certain special characteristics of the health care market, including
that: (1) Diseases and treatments affect each patient differently,
making health care difficult to standardize and making price dispersion
difficult to monitor; (2) patients cannot always know what they want or
need, and physicians effectively must serve as their agents (for
example, by recommending specialists and determining whether a patient
is admitted to a hospital); and (3) patients are typically in a poor
position to choose a hospital because they do not have sufficient
information about hospital quality and costs.\244\ This study suggests
that these special characteristics of the health care market, among
other relevant factors, make it difficult to draw conclusions based on
empirical evidence gathered from other markets. Nevertheless, the same
study concluded that despite these complications, greater price
transparency, such as access to posted prices, might lead to more
efficient outcomes and lower prices.
---------------------------------------------------------------------------
\244\ Austin, A. D., and Gravelle, J. G. ``Congressional
Research Service Report to Congress: Does Price Transparency Improve
Market Efficiency? Implications of Empirical Evidence in Other
Markets for the Healthcare Sector.'' Congressional Research Service.
July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
---------------------------------------------------------------------------
Another study evaluated hospital discharge information following
the publication of prices.\245\ Hospital
[[Page 72259]]
utilization increased for hospitals that priced below the mean market
price, while hospital utilization decreased for hospitals that priced
above the mean market price.
---------------------------------------------------------------------------
\245\ Kim, M. ``The effect of hospital price transparency in
health care markets.'' University of Pennsylvania. 2011. Available
at: https://repository.upenn.edu/dissertations/AAI3475926.
---------------------------------------------------------------------------
In a recent study of the New Hampshire price transparency tool,
researchers found that health care price transparency could shift care
to lower-cost providers and save consumers and payers money.\246\ The
study specifically focused on X-rays, CT scans, and MRI scans; it
determined that the transparency tool reduced the costs of medical
imaging procedures by five percent for patients and four percent for
issuers; and estimated savings of $7.9 million for patients and $36
million for issuers over a 5-year period.
---------------------------------------------------------------------------
\246\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 100 Rev. Econ. & Stat. 1. (2018). Available at:
http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
---------------------------------------------------------------------------
In another example, in Kentucky, public employees were provided
with a price transparency tool that allowed them to shop for health
care services and share in any cost-savings realized by seeking lower-
cost care.\247\ Over a 3-year period, 42 percent of eligible employees
used the program to research information about prices and rewards.\248\
The study found that 57 percent of those that used the transparency
tool chose at least one cost-effective provider, saving state taxpayers
$13.2 million and resulting in $1.9 million in cash benefits paid to
public employees for seeking lower cost care.\249\
---------------------------------------------------------------------------
\247\ Rhoads, J. ``Right to Shop For Public Employees: How
health care incentives are saving money in Kentucky.'' The Dartmouth
Institute for Health Policy and Clinical Practice. March 8, 2019.
Available at: https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf.
\248\ Id.
\249\ Id.
---------------------------------------------------------------------------
The Departments recognize the transparency efforts in New Hampshire
and Kentucky are not necessarily generalizable nationwide and provide
only some empirical data to support the overarching goal of these final
rules that transparency in health care can lead to savings for
consumers and issuers by putting downward pressure on prices. The
Departments are of the view that consumers equipped with information
about the cost of their medical options prior to receiving care will
allow them to be able to make more informed decisions that will put
additional downward pressure on health care costs. While the often-
unequal relationship between patients and providers can sometimes mean
that patients are not always best equipped to determine their care,
there are many health care purchasing decisions that could and should
take into account a patient's financial concerns. For instance,
physician providers may also be able to provide health care
transparency information when referring patients to specialists for in-
or out-of-network care, such as for elective procedures. The pricing
information, combined with the physician's advice, could help health
care consumers evaluate options along the cost and quality spectrums
and help guide them to high-value options. The Departments are of the
view that health care pricing transparency may increase the impact of
economic market forces on the health care markets, despite the health
care market's unique characteristics. The Departments anticipate that
once issuers, plans, and providers are aware that consumers can engage
with the markets in an informed manner, they may adjust their costs to
potentially be more competitive in their pricing of items and services.
1. Impact Estimates of the Transparency in Coverage Provisions and
Accounting Table
The final rules set forth requirements for group health plans and
health insurance issuers to disclose to a participant, beneficiary, or
enrollee, his or her cost-sharing information for covered items or
services from a particular provider or providers. The final rules also
include requirements for plans and issuers to disclose in-network rates
(including negotiated rates, amounts in underlying fee schedules and
derived amounts) for in-network providers, historical allowed amounts
and billed charges for covered items and services provided by out-of-
network providers, and negotiated rates and historical net prices for
prescription drugs through machine-readable files posted on a public
internet website. In accordance with OMB Circular A-4, Table 2 depicts
an accounting statement summarizing the Departments' assessment of the
benefits, costs, and transfers associated with this regulatory action.
The Departments are unable to quantify all benefits and costs of
the final rules. The effects in Table 2 reflect non-quantified impacts
and estimated direct monetary costs and transfers resulting from the
provisions of the final rules for plans, issuers, beneficiaries,
participants, enrollees, and state and the Federal Governments.
Table 2--Accounting Table
------------------------------------------------------------------------
-------------------------------------------------------------------------
Intended Outcomes:
Provides consumers with a tool to determine their estimated
out-of-pocket costs, potentially becoming more informed on the cost
of their health care, which could result in lower overall costs if
consumers choose lower-cost providers or items and services.
Potential increase in timely payments by consumers of
medical bills as a result of knowing their estimated overall costs
prior to receiving services and having the ability to budget for
expected health care needs.
Potential profit gains by third-party mobile application
developers by selling and exchanging consumer health data and
potential benefits to consumers through the development of mobile
applications that may be more user-friendly and improve consumer
access to cost information, potentially resulting in reductions in
out-of-pocket costs.
Potentially enable consumers shopping for coverage to
understand the in-network rates for providers and the negotiated
rates and historical net prices for prescription drugs in different
group and individual health plans available to them and choose a
plan that could minimize their out-of-pocket costs.
States could potentially use the In-network Rate and
Prescription Drugs Files to determine if premium rates are set
appropriately.
Potential reduction in cross-subsidization, which could
result in lower prices as prices become more transparent.
Public posting of in-network rates (including negotiated
rates, amounts in underlying fee schedules, and derived amounts),
negotiated rates, and historical net prices for prescription drugs
could facilitate the review of anti-trust violations and potential
collusion.
Potential for the disclosure of in-network rates to apply
pressure on providers to bill less aggressively.
Strengthening of stakeholders' ability to support
consumers.
Benefits:
Potential societal resource savings (non-quantified
efficiency portion of any overall reduction in consumer health care
expenditures).
Potential to reduce the cost of surprise billing to
consumers.
------------------------------------------------------------------------
[[Page 72260]]
Low estimate High estimate Discount rate
Costs: (million) (million) Year dollar (percent) Period covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)...................................... $4,080.2 $5,472.4 2020 7 2021-2025
4,047.7 5,392.9 2020 3 2021-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------
Quantitative:
Cost to plans, issuers and TPAs to plan, develop, and build
the required internet-based self-service tool and machine-readable
files, to provide in-network rates for in-network providers and out-
of-network allowed amounts, and negotiated rates and historical net
prices for prescription drugs, maintain appropriate security
standards and update and maintain the machine-readable files per
the final rules.
Increase operating costs to plans and issuers as a result
of training staff to use the internet-based self-service tool,
responding to consumer inquiries, and delivering consumer's cost-
sharing information and required notices.
Cost to plans and issuers to review all the requirements in
the final rules.
Non-Quantified:
Potential cost incurred by plans and issuers that wish to
develop a mobile accessible version of their internet-based self-
service tool.
Potential exposure of consumers to identity theft as a
result of breaches and theft of PII.
Potential increase in cyber security costs by plans and
issuers to prevent data breaches and potential loss of PII.
Potential increase in out-of-pocket costs for consumers if
providers or prescription drug manufacturers increase prices for
items and services or plans and issuers shift those costs to
consumers in the form of increased cost sharing other than
increased deductibles.
Potential costs to states to review and enforce provisions
of the final rules.
Potential increase in consumer costs if reductions in cross-
subsidization are for uncompensated care, as this could require
providers finding a new way to pay for those uncompensated care
costs.
Potential increase in health care costs if consumers
confuse cost with quality and value of service.
Potential costs to inform and educate consumers on the
availability and functionality of an internet-based self-service
tool.
Potential consumer confusion related to low health care
literacy and the potential complexity of internet-based self-
service tools.
Potential cost to plans and issuers to conduct quality
control reviews of the information in the in-network rate, out-of-
network allowed amounts, and prescription drug machine-readable
files.
Potential costs to plans, issuers, and TPAs if they are
required to renegotiate contracts in order to remove gag clauses in
order to meet the requirements of the final rules.
Potential costs to plans, issuers, and TPAs if they incur
use cases per user CPT licensure charges.
Potential increase in costs to consumers and issuers if
providers or prescription drug manufacturers engage in
anticompetitive behaviors.
Potential state and Federal costs associated with any
changes in prescription drug prices resulting from the prescription
drug machine-readable file release that may impact state Medicaid,
CHIP, and Basic Health Plan programs and Federal health care
programs.
------------------------------------------------------------------------
Estimate Discount rate
Transfers: (million) Year dollar (percent) Period covered
----------------------------------------------------------------------------------------------------------------
Federal Annualized Monetized ($/year)....... $425.2 2020 7 2021-2025
423.0 2020 3 2021-2025
Other Annualized Monetized ($/year)......... 274 2020 7 2021-2025
274 2020 3 2021-2025
----------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------
Quantitative:
Transfers from the Federal Government to consumers in the
form of increased premium tax credits by approximately $1,047
million in 2022, $623 million in 2023, $216 million in 2024, and
$218 million in 2025 as a result of estimated premium increases by
issuers in the individual market to comply with the final rules.
Transfer from consumers to issuers in the form of reduced
MLR rebate payments in the individual and group markets by
approximately $120 million per year by allowing issuers to take
credit for ``shared savings'' payments in issuers' MLR
calculations.
Transfers from providers to consumers and issuers of
approximately $154 million per year as a result of lower medical
costs for issuers and consumers by allowing issuers to share with
consumers the savings that result from consumers shopping for care
from lower-cost providers.
Non-Quantified:
Potential transfer from providers to consumers facing
collections to reduce the overall amounts owed to providers if they
are able to use competitor pricing as a negotiating tool.
Potential transfer from providers to consumers if there is
an overall decrease in health care costs due to providers reducing
prices to compete for customers.
Potential transfer from issuers to consumers if there is an
overall decrease in prescription drug costs due to potential
reductions in prescription drug prices.
Potential transfer from consumers to issuers or
prescription drug manufacturers if drug manufacturers increase
prescription drug prices.
Potential transfer from consumers to providers if there is
an increase in health care costs if providers and services increase
their in-network rates to match those of competitors.
Potential transfer from issuers to consumers if premiums
decrease and potential transfer from consumers to issuers if
premiums increase.
Potential transfer from issuers to consumers and the
Federal Government in the form of decreased premiums and premium
tax credits as a result of issuers adopting provisions encouraging
consumers to shop for services from lower-cost providers and
sharing the resulting savings with consumers.
Potential Transfers from the Federal Government to drug
manufacturers, PBMs, and retail pharmacies for any change in
prescription drug costs, which could impact prices paid by Federal
health care programs should prescription drug costs increase.
Potential Transfers from drug manufacturers, PBMs, and
retail pharmacies to the Federal Government to for any change in
prescription drug costs, which could impact prices paid by Federal
health care programs should prescription drug costs decrease.
------------------------------------------------------------------------
Table 2 provides the anticipated benefits and costs (quantitative
and non-quantified) to plans and issuers to disclose cost-sharing
information as described at 26 CFR 54.9815-2715A2, 29 CFR 2590.715-
2715A2, 45 CFR 147.211, and at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-
2715A3, 45 CFR 147.212, and make public in-
[[Page 72261]]
network rates, amounts in underlying fee schedules, or derived amounts
of in-network providers, out-of-network allowed amounts paid for
covered items and services, and negotiated rates and historical net
prices for prescription drugs. The following information describes the
benefits and costs--qualitative and non-quantified--to plans and
issuers separately for these three requirements. Some commenters stated
that the Departments attempted analysis of the economic impact of the
proposed rules was wholly inadequate and demonstrated that the
Departments had not performed the basic fact-gathering and analysis
that agencies are expected to undertake before undertaking notice-and-
comment rulemaking. These comments stated that the material the
Departments presented under section VII, ``Economic Impact Analysis and
Paperwork Burden'' was a patchwork of speculation and assumptions
without any grounding in empirical data or analysis. The commenters
further stated: The Departments listed 10 specific cost elements that
they did not attempt to quantify; failed to include any consideration
of regulatory familiarization costs; omitted consideration of training
costs for both government employees who will be charged with enforcing
the regulation and for the staff of regulated issuers and plan sponsors
who will be responsible for compliance; and failed to account for the
impact of the litigation burden on regulated issuers, plan sponsors,
and the public judicial system. Another commenter suggested that the
Departments failed to conduct an adequate cost-benefit analysis because
they failed to consider and quantify regulatory alternatives, failed to
quantify potentially knowable costs, and failed to quantify benefits or
offer additional evidence supporting such benefits. Similarly, another
commenter stated that the Departments' analysis was lacking in any
quantitative assessment of benefits and did not credibly demonstrate
that quantification of benefits might be difficult.
The Departments consulted with various stakeholders in an effort to
develop the economic analysis associated with the final rules,
including the estimated costs. Additionally, the Departments requested
comment on the estimates presented in the proposed rules to obtain more
information and input with respect to the unquantified costs and
benefits. The Departments received a number of comments related to the
cost estimates, which are discussed later in the RIA and ICR sections.
However, the Departments did not receive any comments providing
actionable information as it relates to a number of the unquantifiable
aspects of the proposed rules.
As previously discussed in sections II.B.2.C and V.B.1 in this
preamble, the Departments received comments related to the lack of
estimated costs associated with the renegotiation of provider
contracts, litigation expenses, and the removal of gag clauses.
However, none of the comments received provided any information that
would aid the Departments in estimating such costs. The Departments
recognize that there are numerous aspects associated with the final
rules that they are unable to estimate due to an overall lack of
knowledge and information with regard to the actions that issuers,
providers, or TPAs may be required to take to meet the requirements of
the final rules. As discussed in sections V.C and D, the Departments
have sought to provide estimates to account for the regulatory
familiarization costs and other estimates related to the alternatives
considered in the development of the final rules. For the final rules,
the Departments have updated the regulatory review costs to include
familiarization costs for each state DOI (including the District of
Columbia), issuers, and TPAs.
2. Requirements for Disclosing Cost-Sharing Information to Participant,
Beneficiaries, or Enrollees Under 26 CFR 54.9815-2715A2, 29 CFR
2590.715-2715A2, and 45 CFR 147.211
Costs
Under 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-2715A2(b), and 45
CFR 147.211(b) of the final rules group health plans and health
insurance issuers must disclose required cost-sharing information in
accordance with prescribed method and format requirements upon the
request of a participant, beneficiary, or enrollee. The required cost-
sharing information includes seven content elements, which are
described in paragraph (b)(1) of the regulations and discussed earlier
in section II.B.1 in this preamble. The quantitative costs associated
with this requirement are detailed in the section VI.A.2--of the ICR
later in this preamble.
In addition to the costs described later in the corresponding ICR,
the Departments recognize there may be other costs associated with this
requirement that are difficult to quantify given the lack of
information and data. For example, while the Departments are of the
view that the overall effect of the final rules will lower health care
costs, the Departments recognize that price transparency may have the
opposite effect because in some markets where pricing is very
transparent, price ranges can narrow in response to greater
transparency, and costs can increase.\250\ In section II.B.2.C in this
preamble, the Departments addressed comments related to the potential
for unintended consequences related to the public disclosures required
through the In-network Rate. The Departments note that the current lack
of pricing information means that health care consumers are generally
not able to include price in their health care purchasing decisions.
The Departments are of the view that making pricing information
available will begin to ameliorate distortions resulting from consumer
decision-making not taking costs sufficiently into account.
Additionally, the Departments recognize that states may incur
additional costs to enforce the requirements in the final rules.
---------------------------------------------------------------------------
\250\ Kutscher, B. ``Report: Consumers demand price
transparency, but at what cost?'' Modern Healthcare. June 2015.
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
---------------------------------------------------------------------------
As described in section VI, the Departments assume most self-
insured group health plans will work with a TPA to meet the
requirements of the final rules. The Departments estimated costs in the
high-range estimate by assuming that all issuers and TPAs (for self-
insured group health plans) will need to develop and build their
internet-based self-service tool.
As described in section VI.A.1 of the ICR, the Departments assume
most self-insured group health plans will work with a TPA to meet the
requirements of the final rules. The Departments estimated cost in the
high-end estimate by assuming that all issuers and TPAs (for self-
insured group health plans) will need to develop and build their
internet-based self-service tools from scratch. However, the
Departments also provide a low-end estimate by assuming that over 90
percent of plans, issuers, or TPAs currently provide an internet-based
self-service tool and will only be required to modify an existing
internet-based self-service tool which may already meet some (if not
all) the requirements in the final rules.\251\ The
[[Page 72262]]
Departments recognize that some plans, issuers, or TPAs might also
voluntarily elect to develop or enhance a mobile application, if one is
already available or in some stage of planning and implementation,
which will result in additional costs. Additionally, TPAs generally
work with multiple self-insured group health plans, and as a result,
the costs for each TPA and self-insured group health plan may be lower
to the extent they are able to coordinate their efforts and leverage
any resulting economies of scale.
---------------------------------------------------------------------------
\251\ Sharma, A., Manning, R., and Mozenter, Z. ``Estimating the
Burden of the Proposed Transparency in Coverage Rule.'' Bates White
Economic Consulting. January 22, 2020. Available at: https://www.bateswhite.com/media/publication/183_Estimating%20Burden%20of%20Proposed%20TCR.pdf. In order to
determine our estimates in determining the low-range cost estimate,
the Departments estimated that only 90 percent of plans, issuers,
and TPAs provided an online tool that would meet the assumptions
used in developing the estimated costs.
---------------------------------------------------------------------------
Moreover, health care data breach statistics show there has been an
upward trend in data breaches over the past 10 years, with 2019 having
more reported data breaches than any other year since records first
started being published. Between 2009 and 2019 there have been 3,054
health care data breaches involving more than 500 records; resulting in
the loss, theft, exposure, or impermissible disclosure of 230,954,151
health care records, equating to more than 69.78 percent of the United
States population. Health care data breaches are now being reported at
a rate of more than one per day.\252\ Based on this information, the
Departments recognize the requirements of the final rules provide
additional opportunities for health care data breaches. Although
privacy and security costs have been imbedded into the development and
implementation cost estimates discussed in the section VI.A.1 and
further discussed in section II.B.4 of this preamble, the Departments
expect that plans and issuers will follow existing applicable state and
Federal laws regarding persons who may or must be allowed to access and
receive the information. The Departments recognize that some plans and
issuers may incur additional expenses to ensure a consumers' PHI and
PII are secure and protected. Additionally, as consumers accessing the
internet-based self-service tool may be required to input personal data
to access the consumer-specific pricing information, consumers may be
exposed to increased risk and experience identity theft as a result of
breaches and theft of PII. As noted previously in section II.B.4 of
this preamble, the Departments are finalizing a provision that reminds
plans and issuers of their duty to comply with requirements under other
applicable state or Federal laws, including requirements governing the
accessibility, privacy, or security of information, or those governing
the ability of properly authorized representatives to access
participant, beneficiary, or enrollee information held by plans and
issuers.
---------------------------------------------------------------------------
\252\ ``Healthcare Data Breach Statistics.'' HIPAA Journal.
Available at: https://www.hipaajournal.com/healthcare-data-breach-statistics/.
---------------------------------------------------------------------------
One commenter stated that since multiemployer plans do not directly
control the process of negotiations or the resulting information, these
plans do not have access to the information necessary to satisfy the
final rules and plans could be subject to significant penalties for
failure to comply. Another commenter, that surveyed employers who
sponsor self-insured ERISA-covered plans, noted that respondents would
likely contract with a TPA to comply with the final rules because
employers do not have all the necessary data nor the capability to
collect that data. Employers indicated that contracting with a TPA for
these requirements would come at a significant compliance cost to them.
Commenters noted that they rent networks from issuers and contract with
those issuers as TPAs to administer plan benefits. It is the issuer
that holds the pricing information for medical services, facilities,
and providers, not the self-insured employer. Another commenter stated
that the burden incurred by plans, issuers, and TPAs would be crippling
for smaller TPAs and health plans, and that burden would ultimately be
passed along to employers, and, therefore, to consumers. Another
commenter expressed concern that all of the data aggregation and
collection required under the regulations--along with the need to
contract with a third-party developer to create an on-line cost-sharing
liability service tool that is capable of providing customized cost-
sharing information to a particular participant, beneficiary, or
enrollee--may be overly costly to plans. The commenter further
suggested that there may also be significant costs associated with data
storage.
The Departments appreciate the comments received in response to the
proposed rules and recognize that not all plans will be the source of
the material information required to meet the requirements of the final
rules, and that many plans will ultimately seek out third-party
assistance in the development of their internet-based self-service tool
and machine-readable files, thus avoiding any potential penalties for
noncompliance. As noted in section II.B.5 of this preamble,
multiemployer plans may contract with a TPA or other third party (for
example, a clearinghouse) to meet the requirements under the final
rules. The Departments note that it is possible that obtaining third-
party assistance to meet the requirements of the final rules could
result in additional costs. The Departments expect, however, that TPA,
or other third party, assistance will help alleviate some of the cost
concerns expressed by commenters as a result of economies of scale. As
noted above, commenters noted that many self-insured ERISA plans rent
networks from issuers and contract with issuers as TPAs to administer
plan benefits. By leveraging their relationships with their issuer-TPA,
self-funded plans may be able to reduce their overall costs by using
any tools developed by those issuers. The Departments also recognize
that in order to meet the requirements of the final rules, some smaller
TPAs and issuers could face disproportionate increases in costs.
However, the Departments anticipate that a number of TPAs and issuer-
TPAs will seek to coordinate their efforts and take advantage of any
resulting economies of scale to reduce their overall costs, and that
this approach can be leveraged in order to reduce concerns related to
the development of both the internet-based self-service tool as well as
the required machine-readable files. The Departments recognize that
issuers and TPAs will incur potential costs associated with data
storage and providing access to the internet-based self-service tool.
These costs can be generally broken down into two sections: Bandwidth
pricing and disc space. Bandwidth Pricing accounts for the amount of
traffic going to a site, the size of the information that is
transferred from the server to the user's browser, and the speed in
which that happens. Provided that 99 percent of websites do not exceed
5 gigabytes of bandwidth per month,\253\ this means if an issuer's or
TPA's self-service tool, hosted on Microsoft's cloud product, would be
free or minimal if beyond five gigabytes.\254\ Disk Space Pricing
accounts for the size of the hard drives necessary to host a website.
Assuming that each issuer or TPA would need an estimated 351 gigabytes
of storage this would translate to approximately $8 per month. Thus,
assuming that each issuer or TPA will not require five gigabytes of
bandwidth for their internet-based self-service tool, the Departments
are of the
[[Page 72263]]
view that the overall costs to store and provide data through the
internet-based self-service tool will be minimal. The Departments
recognize that the final rules will impose significant costs on plans,
issuers, and TPAs, and that some of these costs may be transferred to
consumers in the form of higher premiums or changes in the cost-sharing
structure of plans.
---------------------------------------------------------------------------
\253\ ``How Much Bandwidth and Disk Space Do I Really Need?''
Hosting Manual. Available at: https://www.hostingmanual.net/bandwidth-disk-space-need/.
\254\ ``Bandwidth Pricing Details.'' Microsoft Azure. Available
at: https://azure.microsoft.com/en-us/pricing/details/bandwidth/.
---------------------------------------------------------------------------
Intended Outcomes
Informed Consumers. Through increased price transparency, consumers
armed with pricing information will have greater control over their own
health care spending, which can foster competition among providers,
resulting in less disparity in health care prices or an overall
reduction in health care prices. Consumers who use the internet-based
self-service tool will be able to access their cost-sharing amount paid
to date; their progress toward meeting their accumulators, such as
deductibles and out-of-pocket limits; their estimated cost-sharing
liability for an identified item or service; negotiated rates for in-
network providers for covered items and services, and the out-of-
network allowed amounts for covered items and services. Additionally,
consumers will know how much health care services will cost for a
particular treatment-, and, and if applicable, whether coverage of a
specific item or service is subject to a prerequisite. As discussed
previously in section II.B.1.a of this preamble, section 2713 of PPACA
requires group health plans and health insurance issuers to provide
certain recommended preventive items and services without cost-sharing.
However, if the same items or services are furnished as non-preventive
actions or by an out-of-network provider, the participant, beneficiary,
or enrollee may be subject to the cost-sharing terms of his or her
plan. If a plan or issuer cannot determine whether the request is for a
preventive item or service, the plan or issuer must display the non-
preventive cost-sharing liability, along with a note that the item or
service may not be subject to cost-sharing if it is billed as a
preventive service. Pricing information also gives consumers the
ability to plan ahead for any known items and services they may require
in the near future. The Departments are of the view that access to this
information is essential to enable consumers to make informed decisions
regarding specific services or treatments, budget appropriately to pay
any out-of-pocket expenses, and determine what impact any change in
providers, items, or services will have on the cost of a particular
service or treatment.
Several consumers stated that they want the opportunity to shop for
the best price when seeking out medical care and expressed that this
information is critical when deciding whether to proceed with a test or
procedure. Other consumers expressed the desire to shop for items and
services and stated that shopping for health care would give them more
control over their personal health care decisions and spending. Some
consumers felt strongly that they should be able to compare prices to
find the best deal for non-life-threatening care. Some other consumers
also expressed frustration when describing their own experiences of
trying and failing to obtain pricing information before receiving a
particular service.
The Departments agree that providing the information required in
the final rules will provide consumers with tools and information they
can use to determine and evaluate the potential costs associated with
their particular health care needs, thus providing them the opportunity
to obtain the care they need at a cost they find acceptable.
Consumers may become more cost conscious. The Departments are of
the view that with increased price transparency consumers may begin to
focus more carefully on the costs of services. Currently, consumers may
be aware they have a coinsurance of 20 percent for an item or service,
but they may be unaware of what dollar amount they will ultimately be
responsible for paying. Knowing that dollar amount may motivate
consumers to seek lower-cost providers and services or seek needed care
they did not obtain because of uncertainty or concerns about the costs.
As discussed in sections I.E.3, II.C, and V.B.2-4 in this preamble,
there has been recent evidence in New Hampshire and Kentucky that
supports the Departments' view that having access to pricing
information, along with currently available information on provider
quality and incentives to shop for lower prices, can result in
consumers choosing providers with lower costs for items and services,
thus potentially lowering overall health care costs.\255\ The
Departments acknowledge that this may only hold true if cost and cost
sharing varies between services and providers. Depending on the degree
of cost variation between specific items and services, there could be
large variations in the degree to which prices change per item or
service resulting in wide variations in health care costs and
associated out-of-pocket costs.\256\ Cost sharing in some alternative
contracting models, such as HMOs and Exclusive Provider Organizations
(EPO), generally occurs through fixed copayment amounts regardless
which provider furnishes a covered item or service and, therefore, the
internet-based self-service tool will provide little incentive for
consumers to choose less costly providers in this context.
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\255\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 100 Rev. of Econ. and Stat. 1. July 16, 2018.
Available at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Rhoads, J.
``Right to Shop for Public Employees: How health care incentives are
saving money in Kentucky.'' The Dartmouth Institute for Health
Policy and Clinical Practice. March 8, 2019. Available at: https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf.
\256\ The evidence cited in this RIA yields per-capita annual
savings estimates ranging from between $3 and $5 (=$2.8 million +
$1.3 million + $7.0 million + $2.3 million two-year savings, across
1.3 million California public employees and their family members,
per Boynton and Robinson (2015)), to $6.50 (=$7.9 million + $36
million five-year savings found by Brown (2018), divided across the
1.36 million residents of New Hampshire), to $17 (=$13.2 million
three-year savings across 0.26 million beneficiaries, per Rhoads
(2019)). If these results were extrapolated to the entire U.S.
population, the estimate of rule-induced reductions in annual
consumer expenditures could range from $0.98 billion to $5.5
billion, with the median result across the three studies at $2.1
billion. This range has a tendency toward overestimation, in that
effects of the Hospital Price Transparency final rule and existing
non-Federal transparency programs have not been subtracted off.
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Timely Payment of Medical Bills. The Departments anticipate that
consumers with access to the information provided in response to the
final rules will be more likely to pay their medical bills on time. A
recent Transunion survey found that 79 percent of respondents said they
would be more likely to pay their bills in a timely manner if they had
price estimates before obtaining care.\257\ In addition, a non-profit
hospital network found that the more information they shared with
patients, the better prepared those patients were for meeting their
responsibilities. The hospital network reported that providing price
estimates to patients resulted in increased point of service cash
collections from $3 million in 2010 to $6 million in 2011.\258\
However, the Departments recognize that consumers may not be aware of
any potential balance billing charges, where not prohibited by state
law, and other potential costs associated with their
[[Page 72264]]
health care such as facility fees etc. While these consumers will have
a better idea of the costs they will incur when obtaining health care,
they will likely be unaware of any additional charges they could incur
as a result of obtaining care resulting in higher than expected out-of-
pocket costs. Additionally, consumers may not fully be aware of their
costs due to potential medical complications that might arise during
the course of treatment or while obtaining a specific service.
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\257\ Kutscher, B. ``Report: Consumers demand price
transparency, but at what cost?'' Modern Healthcare. June 2015.
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
\258\ ``Reimagining Patient Access.'' Insurancenewsnet. December
29, 2015. Available at: https://insurancenewsnet.com/oarticle/reimagining-patient-access#.
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Increased Competition Among Providers. Studies have found that
state price transparency regulations have resulted in hospitals
decreasing their charges and a decrease in mean price and price
variability for queried procedures. One study found the publication of
chargemaster data resulted in a decrease in mean price and price
variability for queried procedures.\259\ However, another study
attributed the reduction in charges to the ``reputational costs of
perceived overcharging,'' yet also noted that reductions in charges
were associated with decreases in discounts leading to no consumer
savings.\260\ Another issuer-initiated price transparency program,
designed to encourage the selection of high-value providers, provided
consumers with price differences among MRI facilities.\261\ Those
patients provided pricing information saw an 18.7 percent reduction in
the cost per test and a decrease in the use of hospital-based
facilities.\262\ The study also found that price variations between
hospital and non-hospital facilities were reduced by 30 percent.\263\
As discussed in sections I.B in this preamble, the Departments
recognize that requiring hospitals to display payer-specific negotiated
charges, discounted cash prices, and de-identified minimum and maximum
negotiated charges for as many of the 70 CMS selected shoppable
services and additional hospital-selected shoppable services for a
combined total of at least 300 shoppable services may play a role in
decreasing mean prices and price variability.\264\ However, the
Departments are of the view that the Hospital Price Transparency final
rule does not, in itself, result in reduced prices and price
variability as the rule does not result in consumers receiving complete
price estimates for health care items and services from both hospitals
and issuers. Further, the Hospital Price Transparency final rule does
not provide price transparency with respect to items and services
provided by other health care providers. Therefore, the Departments are
of the view that the requirements of the final rules will provide the
additional price transparency necessary to empower a more price-
conscious and responsible health care consumer and lead to increased
competition among providers as consumers will be aware of and have the
ability to compare the out-of-pocket cost of a covered item or service
prior to receiving an item or service, which could force higher-cost
providers to lower their prices in order to compete for the price
sensitive consumer.
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\259\ Ward, C., and Reeder, T. ``The Evolution and Impact of
Hospital Price Transparency in North Carolina.'' North Carolina
Medical Journal. Volume 81. Issue 2. April 2020. Available at:
https://www.ncmedicaljournal.com/content/81/2/95.short.
\260\ Christensen, H.B., Floyd, E., and Maffett, M. ``The Only
Prescription is Price Transparency: The Effect of Charge-Price-
Transparency Regulation on Healthcare Prices.'' Management Science.
February 21, 2019. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2343367.
\261\ Wu, S.J., et al. ``Price transparency for MRIs increased
use of less costly providers and triggered provider competition.''
Health Affairs. August 2014. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0168.
\262\ Id.
\263\ Id.
\264\ 84 FR 65524 (Nov. 27, 2019).
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3. Requirements for Public Disclosure of In-Network Provider Rates for
Covered Items and Services, Out-of-Network Allowed Amounts and
Prescription Drug Pricing Information Through Machine-Readable Files
Under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212
Costs
Under 26 CFR 54.9815-2715A3(b), 29 CFR 2590.715-2715A3(b), and 45
CFR 147.212(b) of the final rules, group health plans and health
insurance issuers are required to make available to the public, on an
internet website, three digital files in a machine-readable format. The
first file (the In-network Rate File) must include information
regarding all applicable rates, which may include negotiated rates,
underlying fee schedules, or derived amounts, to the extent they may be
used for purposes of determining provider reimbursement or cost-sharing
for in-network providers. The Departments note that prescription drug
products may be included in the In-network Rate File only to the extent
they are included as part of an alternative payment arrangement, such
as a bundled payment arrangement. The second file (the Allowed Amount
File) must provide data showing the allowed amounts and billed charges
with respect to covered items and services, including prescription
drugs, furnished by out-of-network providers over a 90-day period
beginning 180 days prior to the publication date of the machine-
readable file. The third file (the Prescription Drug File) must include
information for negotiated rates and historical net prices for
prescription drugs, organized by NDC. Plans and issuers are required to
make the information available in accordance with certain method and
format requirements described at paragraph (b)(2) and update these
files monthly as required under paragraph (b)(3). The quantitative
costs associated with meeting these requirements are detailed in
section VI.2 of the ICR section.
Some commenters stated that the requirement to use billing codes
would be very costly and potentially cost-prohibitive. One commenter
indicated this is because use of CPT codes, the most commonly used
billing codes, requires licensure by the American Medical Association
(AMA). According to the commenter, the AMA charges licensing fees based
on use cases per user. Another commenter noted that some self-funded
plans rent networks and do not have real-time access to network
pricing, and there are fees charged to plans to access the negotiated
discounts with the provider network the plan has rented. As a result,
the commenter suggested that plans will have to pay the network access
fees twice--once the information required under the final rules and a
second time when the actual claim is received and processed through an
intermediary--to meet the requirements of the final rules.
The Departments understand that the use of CPT codes may represent
an additional cost for some plans and issuers. Generally, the
Departments anticipate that if a plan or issuer currently has the
capability or licensure to record CPT codes on EOBs mailed to
consumers, the plans or issuers should also be able to use that CPT
code to make the public disclosures required through the final rules
without, or with minimal, additional costs. The Departments also have
concluded that, as plans and issuers would already include licensing
costs for using CPT codes in the cost of doing business, they would not
incur additional costs to use the CPT codes to populate the machine-
readable files. The Departments acknowledge that some plans and issuers
could face instances where they could incur additional costs in order
to access the required CPT or network information based on the
structure of licensing agreements to which they are currently parties.
However, due to an overall lack of specific information and knowledge
associated with the number of plans and issuers that currently have
[[Page 72265]]
such licensing agreements, the structure of those agreements, and the
alternatives available to those plans and issuers, the Departments are
unable to accurately estimate any associated costs that might be
incurred under these circumstances.
One commenter stated that for many employer-sponsored health plans,
in-network rates usually belong to a network administrator, not the
health plan, and, in the event network administrators were to update
their contractual agreements to permit plans to receive and share
pricing information, it is likely they will charge fees or request
financial concessions from plans, which will increase administrative
burdens on group health plans.
The Departments understand that requiring release of this pricing
information will affect certain commercial arrangements and
expectations that prevail in parts of the health care industry today,
which could result in certain one-time and ongoing administrative
costs. However, the Departments are of the view that making this
information available to consumers and the public will serve consumers'
long-term interests in facilitating a consumer-oriented, information-
driven, more competitive market. Additionally, as discussed previously
in section II.C in this preamble, the Departments are finalizing
several special rules to streamline the provision of the public
disclosures required through the final rules. These special rules were
designed to reduce the overall compliance costs of the disclosures
required by the final rules and to support smaller issuers and plans in
meeting the requirements of the final rules by permitting certain
contractual arrangements and the aggregation of allowed amount data in
some circumstances.
The Departments also recognize that a certain amount of data
storage will be required to post the machine-readable files on a
publicly available internet website. Through the efficiencies of cloud
computing and data storage, the cost to host large files dramatically
decreased in price in the past several years. Popular services such as
Simple Storage Service from Amazon Web Services and Standard Storage
from the Google Cloud Platform can host files for roughly $0.026 per
gigabyte. The Departments' size estimates of roughly 5 gigabytes for
each machine-readable file would incur a monthly data storage cost of
approximately $0.39 for all of the machine-readable files.
Non-Quantified Costs for Public Disclosure of In-Network Rates. In
addition to the costs described in section VI.A.2, the Departments
recognize there may be other costs associated with the requirement to
make in-network rates publicly available that are difficult to quantify
given the current lack of information and data. While the Departments
are of the view that the overall effect of the final rules will be to
provide greater price transparency and potentially lower health care
prices, there are instances in very transparent markets where price
ranges can narrow and average costs can increase as a result of price
transparency.\265\ The Departments also recognize that plans and
issuers may experience ongoing additional costs (for example, the cost
of quality control reviews) to ensure they comply with the requirements
of the final rules. In addition, the Departments are aware that
information disclosures allowing competitors to determine the rates
their competitors are charging may dampen each competitor's incentive
to offer a lower price or result in a higher price equilibrium.\266\
While plans and issuers with the highest in-network rates may see a
decrease in their in-network rates, as their providers respond to
consumer and smaller issuers' concerns regarding paying more for the
same item and service, plans and issuers with the lowest in-network
rates may see their lower cost providers adjust their rates upward.
However, most research suggests that when better price information is
available, prices for goods sold to consumers fall. For example, in an
advertising-related study, researchers found that the act of
advertising the price of a good or service is associated with lower
prices.\267\
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\265\ Kutscher, B. ``Report: Consumers demand price
transparency, but at what cost?'' Modern Healthcare. June 2015.
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
\266\ Koslov, T., and Jex, E. ``Price transparency or TMI?''
United States, Federal Trade Commission. Available at: https://www.ftc.gov/news-events/blogs/competition-matters/2015/07/price-transparency-or-tmi.
\267\ Austin, D. A, and Gravelle, J. G. ``Does Price
Transparency Improve Market Efficiency? Implications of Empirical
Evidence in Other Markets for the Health Sector.'' Congressional
Research Service. June 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
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A potential additional non-quantified cost could be the cost to
remove gag clauses from contracts between plans, issuers, and
providers. Contracts between plans, issuers, and providers often
include a gag clause, which prevents plans and issuers from disclosing
in-network rates. The Departments recognize that plans, issuers and
providers may incur a one-time expense for their attorneys to review
and update their provider contracts to remove any relevant gag clauses.
Comments received regarding gag clauses and contract negotiations are
further discussed in section VI.A.2 later in this preamble.
Another potential cost concerns the final rules' impact on a plan's
or issuer's ability or incentive to establish a robust network of
providers. A health insurance provider network is a group of providers
that have contracted with a plan or issuer to provide care at a
specified price the provider must accept as payment in full. Many
times, plans and issuers want consumers to use the providers in their
network because these providers have met the plan's or issuer's quality
standards and agreed to accept an in-network rate for their services in
exchange for the patient volume they will receive by being part of the
plan's or issuer's network.\268\ Some plans and issuers offer a narrow
network: These networks operate with a smaller number of providers,
meaning a consumer will have fewer choices when it comes to in-network
providers, but often offer lower monthly premiums and out-of-pocket
costs.\269\ The Departments recognize that making in-network rates
public may create a disincentive for plans and issuers to establish a
contractual relationship with a provider (including in narrow networks)
because providers may be unwilling to give a discount to plans and
issuers when that discount will be made public. As addressed further in
section VI.C later in this preamble, the requirements of the final
rules could result in a reduction in revenue for those smaller plans
and issuers that are unable to pay higher rates to providers and may
require them to narrow their provider networks, which could affect
access to care for some consumers. Due to smaller plans' and issuers'
potential inability to pay providers with higher rates, smaller plans
and issuers may further narrow their networks to include only providers
with lower rates, possibly making it more difficult for smaller plans
and issuers to fully comply with network adequacy standards described
at 45 CFR 156.230 or other applicable state network adequacy
requirements.
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\268\ Davis, E. ``Health Insurance Provider Network Overview.''
Verywell Health. August 2019. Available at: https://www.verywellhealth.com/health-insurance-provider-network-1738750.
\269\ Anderman, T. ``What to Know About Narrow Network Health
Insurance Plans.'' Consumer Reports. November 23, 2018. Available
at: https://www.consumerreports.org/health-insurance/what-to-know-about-narrow-network-health-insurance-plans/.
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Some commenters stated that public disclosure of in-network rates
could affect the sustainability and affordability
[[Page 72266]]
of QHPs offered through the Exchanges by placing upward pressure on
rates and by placing provider participation in networks at risk. One
commenter stated that the potential negative effects on QHPs would
especially harm unsubsidized consumers and consumers in rural areas
where provider consolidation is most common and could impact overall
marketplace stability and the risk pool. Furthermore, commenters
asserted that increased premiums for QHPs could result in increased
Federal spending in the form of higher premium tax credit (PTC)
payments, which could substantially increase the Federal deficit over
10 years. One commenter stated that the Departments should not finalize
the release of in-network rates until they fully evaluate the impact on
affordable plan options on the Exchanges and the effects on Federal
spending.
As discussed later in section V.B.5 of this preamble, the
Departments estimate premiums for the fully-insured markets will be
$471 billion for 2022, including the individual, small group, and large
group markets. The Departments estimate that the cost for 2022
represents approximately 2.4 percent of projected commercial insured
premiums for the fully-insured market, 1.4 percent in 2023, 0.5 percent
in 2024, and 0.5 percent in 2025. Assuming this level of premium
increase in the individual market, PTC outlays are estimated to
increase by about $1,047 million in 2022, $623 million in 2023, $216
million in 2024, and $218 million in 2025. Given that the 2021
President's Budget estimates that PTC outlays are expected to be $43.8
billion in 2022, $44.8 billion in 2023, $45.875 billion in 2024, and
$48.2 billion in 2025,\270\ the Departments expect the estimated
increase of $1,047 million in 2022, $623 million in 2023, $216 million
in 2024, and $218 million in 2025 to have minimal impacts on
anticipated enrollment and are not of the view that this increase will
result in any widespread negative effects on market stability.
Additionally, the Departments have determined that enrollment impacts
will be minimal, as estimated premium impacts are relatively small, and
rate increases for subsidized enrollees in the individual market will
be largely mitigated. Additionally, participants, beneficiaries, and
enrollees currently make health insurance coverage decisions based on
their particular health and financial situations, and it is not
predictable how information provided as a result of the final rules
will significantly impact those health insurance coverage decisions.
Thus, the Departments do not expect the final rules to significantly
increase the selection risk beyond the levels that currently exist. The
Departments do acknowledge that the estimated increases in premiums
could result in minor harm to unsubsidized consumers as they could be
faced with increased premiums that would not be negated by any
increases in PTC and this could impact those consumers' decisions
related to obtaining health insurance coverage.
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\270\ OMB 2021 President's Budget. Available at: https://www.whitehouse.gov/wp-content/uploads/2020/02/budget_fy21.pdf.
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The Departments received several comments from issuers, providers,
and employers stating that the requirement to publicly disclose in-
network rates would threaten the viability of their business models or
business models upon which they rely. One commenter stated that the
proposal to release in-network rates could affect the viability of
individual and small group market health plans sold by small issuers.
The commenter further suggested that ``safety net'' health plans (which
serve individuals and families that do not have access to other sources
of coverage in markets that other issuers find unprofitable) currently
may be able to access more favorable contract terms with providers, and
these types of arrangements would be at risk if the in-network rate
information were required to be made public. The commenter expressed
particular concern that exposure of the rates of safety net hospitals
may uniquely disadvantage them in negotiations with plans and issuers
because they may have to raise rates on certain services to support
safety net activities. Similarly, a hospital system stated that
publishing in-network rates would negatively impact its ability to
contain costs and threaten its current participation in the networks of
nearly all area health plans. Another commenter indicated that
providers would leave plans' and issuers' networks if plans' and
issuers' attempts to achieve more favorable rates using public in-
network rate information proved unsuccessful. Another commenter argued
that the policy requiring disclosure of in-network rates could also
result in the collapse of the network administrator business model,
which would result in significantly increased administrative costs for
health plans that would need to contract separately with each
participating provider.
The Departments understand that requiring the release of this
pricing information will upset certain commercial arrangements and
expectations that prevail in parts of the health care industry today,
which could result in certain one-time and ongoing administrative
costs. However, the Departments have concluded that providing increased
price transparency and making this information available to the public
will serve the public's long-term interests in facilitating a consumer-
oriented, information-driven, more competitive market potentially
leading to reduced overall health care costs.
Some commenters suggested that, by using publicized in-network rate
information, plans and issuers could also coordinate to reduce provider
payment levels below market competitive rates, a so-called ``race to
the bottom.'' Some of these commenters stated that this ``race to the
bottom'' could also potentially hurt access to, and quality of, care.
For example, one commenter stated that if provider reimbursement rates
were set too low, patient access to care would be negatively impacted
because providers will not have the resources to invest in technology,
training, and equipment.
One commenter suggested that plans and issuers would likely want to
re-negotiate rates once they learn local prices and that dominant
issuers could use payer specific in-network rate information to deter
and punish hospitals that lower their rates or enter into value-based
arrangements with the dominant issuer's competitors.
Several commenters stated that required disclosure of in-network
rates could result in an increase in health care prices. Others
specifically expressed concerns that making payer-specific in-network
rates available would disrupt contract negotiations between providers
and health plans and result in providers changing their rates in
anticompetitive ways (``race to the top'') and could promote an
environment that could support collusion between providers, resulting
in increased prices. Other commenters suggested that required
disclosures would lead to the consolidation of providers and even
greater consolidation in the commercial health insurance industry, and
expressed concerns that disclosures could particularly harm small
health plans and TPAs who may have been able to get discounted rates by
offering health plans in a limited service area.
One commenter noted that other states' transparency systems used
several distinguishable features to mitigate the risks of publicizing
rates, but noted that, despite these efforts, the data was still used
in contract negotiations.
[[Page 72267]]
The Departments recognize that there is the potential for adverse
market outcomes as a result of the final rules. As noted previously,
the Departments are aware of the potential that plans and issuers could
seek to use the public availability of in-network rates or underlying
fee schedules in attempts to lower prices in what certain commenters
called a ``race to the bottom.'' As noted previously in this section,
the Departments recognize the potential for anticompetitive behaviors
and increased consolidation that may occur should providers use the in-
network rate or fee schedule data to increase their rates or should
smaller plans and issuers struggle to comply. The Departments recognize
that provider collusion could result in increased prices, and also
recognize that this sort of behavior could result in distinct coverage
areas or agreements where providers choose not to compete for
consumers. As discussed previously in this preamble, the Departments
nonetheless have concluded that providing increased price transparency
and making this information available to the public will serve the
public's long-term interests in facilitating a consumer-oriented,
information-driven, more competitive health care market.\271\ Should
the market become more competitive, as the Departments anticipate, the
reduction in prices may provide more options for those providers that
function as ``safety-net providers'' to expand their networks or
enhance the services they currently provide by organizing and
delivering a significant level of health care and other related
services to uninsured, Medicaid, and other vulnerable populations. The
Departments also reason that the likelihood of price and other forms of
collusion will be mitigated to some extent by the actions of state and
Federal regulatory and antitrust enforcement authorities and the
enforcement of current market laws and regulations. The Departments are
of the view that enforcement actions taken to reduce the likelihood of
price collusion will further reduce the chances that issuers will seek
to reduce the size of their networks.
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\271\ Gudiksen K.L., Chang, S.M., and King, J.S. ``The Secret of
Health Care Prices: Why Transparency Is in the Public Interest.''
California Health Care Foundation. July 2019. Available at: https://www.chcf.org/wp-content/uploads/2019/06/SecretHealthCarePrices.pdf.
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Although consumer education is not a requirement of the final
rules, plans, issuers and TPAs may face additional costs if they chose
to inform and educate their consumers about the options available to
them, how to use these tools, increase their general health care
knowledge. Providing educational opportunities to participants,
beneficiaries, or enrollees could encourage those participants,
beneficiaries, or enrollees to seek lower cost services, providing
plans, issuers and TPAs the potential to realize a return on the
investments incurred to comply with the final rules.
Non-Quantified Cost for Public Disclosure of out-of-network allowed
amounts. In addition to the costs described in section VI.A.2 and the
previous analysis related to the public disclosure of in-network rates,
the Departments recognize that there may be other costs associated with
the requirement to make historical payments of out-of-network allowed
amounts and billed charges publicly available that are difficult to
quantify, given the current lack of information and data.
Furthermore, while plans and issuers must de-identify data (such as
claim payment information for a single provider) and ensure certain
sensitive data are adequately protected, unauthorized disclosures of
PHI and PII may increase as a result of manual preparation and
manipulation of the required data. The potential disclosures of PHI and
PII may require plans, issuers, and TPAs to obtain additional cyber-
security insurance that could lead to additional costs.
Non-Quantified Cost for Public Disclosure of Prescription Drug
Pricing Information. In addition to the costs described in section
VI.A.2 and the previous analysis related to the public disclosure of
in-network rates and allowed amounts, the Departments recognize that
there are other costs associated with the requirement to make
negotiated rates and historical net prices for prescription drugs
publicly available that are difficult to quantify, given the current
lack of information and data. For example, as a result of the
availability of consolidated negotiated rates and historical net
prices, drug manufacturers may seek to restructure their rebate and
discount programs and could potentially cease providing rebates to
plans and issuers, PBMs, or pharmacies, which could then result in less
savings being passed on to consumers.
Intended Outcomes
The Departments are of the view that providing greater price
transparency by requiring group health plans and health insurance
issuers to make information regarding all applicable rates publicly
available, which may include negotiated rates, amounts in underlying
fee schedules, or derived amounts for in-network provider rates; 90-
days of historical allowed amount and billed charges data for out-of-
network providers; and prescription drug negotiated rates and
historical net prices will ultimately benefit plans and issuers,
regulatory authorities, consumers, and the overall health care market.
Group Health Plans and Health Insurance Issuers. Plans and issuers
may benefit from these requirements because under the final rules a
plan or issuer would have a better understanding of other plans' or
issuers' in-network rates. This may allow plans and issuers paying
higher rates for the same items or services to negotiate with certain
providers to lower their rates, thereby lowering provider reimbursement
rates, reducing price variation, and potentially resulting in an
overall decrease in health care costs. The Departments acknowledge,
however, as noted in the ``costs'' section (V.B.3) earlier in this
preamble, that knowledge of other providers' in-network rates could
also drive up rates if a provider discovers they are currently being
paid less than other providers by a plan or issuer and, therefore, seek
to negotiates higher rates.
In addition, the final rules may result in more plans and issuers
using a reference pricing structure. Under this structure,
participants, beneficiaries, or enrollees who select a provider
charging above the reference price (or contribution limit) must pay the
entire difference and these differences do not typically count toward
that individual's deductible or out-of-pocket limit. Plans and issuers
may want to use a reference pricing structure to pass on any potential
additional costs associated with what they can identify as higher-cost
providers to the participant, beneficiary, or enrollee. The Departments
recognize that reference pricing might not impact every consumer. For
example, the California Public Employees' Retirement System (CalPERS)
provides exceptions from reference pricing when a member lives more
than 50 miles from a facility that offers the service below the price
limit. It also exempts the patient if the patient's physician gives a
clinical justification for using a high-priced facility or hospital
setting. Another example is a business with a self-insured group health
plan that exempts laboratory tests for patients with a diagnosis of
cancer from its reference pricing program. However, reference pricing
has generally been shown to result in price reductions, as opposed to
mere slowdowns in the rate of price
[[Page 72268]]
growth. For example, in the first two years after implementation,
reference pricing saved CalPERS $2.8 million for joint replacement
surgery, $1.3 million for cataract surgery, $7.0 million for
colonoscopy, and $2.3 million for arthroscopy.\272\
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\272\ Boynton, A., and Robinson, J. ``Appropriate Use of
Reference Pricing Can Increase Value.'' Health Affairs Blog. July 7,
2015. Available at: https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/.
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Regulatory Authorities. In many states, issuers must obtain prior
approval for rate changes from the state's DOI. Regulatory authorities
such as state DOIs might benefit from the final rules because knowledge
of provider in-network rates and out-of-network allowed amounts paid to
out-of-network providers could support determinations of whether
premium rates, including requests for premium rate increases, are
reasonable and justifiable.
Consumers. Access to the in-network rates between plans and issuers
and in-network providers, the amount plans and issuers have paid to
out-of-network providers, and prescription drug pricing information
will allow consumers to understand the impact of their choice of health
insurance coverage option and their choices of providers on the cost of
a particular service, item, or treatment. Giving consumers access to
this information as part of their health care decision-making process
may facilitate a greater degree of control over their own health care
costs. Furthermore, having access to publicly available out-of-network
allowed amounts will provide consumers who are shopping for health
insurance coverage the ability to compare the different rates plans and
issuers ultimately pay for items and services, including items and
services from providers that might be out-of-network. While the
Departments are of the view that consumers will benefit from the final
rules, the Departments recognize that utilizing the required
information will not be practical or reasonable in an emergency
situation. Similarly, some consumers may need assistance in
understanding complex terms or other associated mechanisms in order to
utilize this information.
The Departments recognize that beneficiaries and enrollees in state
and Federal health care programs (including Medicare, Medicaid, CHIP,
Basic Health Program and coverage provided by the Department of Defense
and Veterans Administration) will be impacted by spillover effects
related to any reductions or increase in prices for individual items
and services and prescription drugs as a result of the final rules. For
example, Medicare Part B has historically reimbursed physicians for
physician-administered drugs using a formula that is based off the
average sales price (ASP). To the extent the final rules drive changes
in prescription drug prices, that will change the Federal reimbursement
rates under Medicare Part B and may impact Medicare beneficiaries' out-
of-pocket costs for their prescriptions. In addition, by law, Medicaid
programs in every state receive the lowest negotiated rate for
prescription drugs. To the extent the final rules drive changes in
prescription drug prices, this will impact the amount all states, the
Federal Government, and some beneficiaries pay for prescription drugs.
Similarly, if providers start increasing (or decreasing) their in-
network rates, there could also be spillover effects for Medicare
Advantage or Medicaid Managed Care Organizations (MCO), particularly
for issuers and plans that use the same network for both private plans,
Medicare Advantage Plans and Medicaid MCOs. These changes will impact
the amount the Federal Government, states, and beneficiaries will need
to pay for their Medicare and/or Medicaid.
Overall Health Insurance Market. The price transparency required by
the final rules may also induce an uninsured person to obtain health
insurance coverage. Depending on premium rates, an uninsured individual
might select health insurance coverage after learning the actual dollar
difference between the usual and customary rates that he or she pays
for items and services and the in-network rates and out-of-network
allowed amounts under the terms of a plan or issuer's policy. In
addition, the final rules might force providers to lower their rates
for certain items and services in order to compete for the price
sensitive consumer, plan, or issuer. Although the immediate payment
impact would be categorized as a transfer, any accompanying health and
longevity improvements would be considered benefits (and any
accompanying increases in utilization would, thus, be considered
additional costs). As discussed in section V.B in this preamble, a
study of New Hampshire's HealthCost initiative found that the
availability of pricing information resulted in a five percent
reduction in costs for medical imaging procedures. The study further
found that patients saved approximately $7.5 million dollars on X-Ray,
CT, and MRI scans over the five-year study period (dollars are stated
in 2010 dollars).\273\
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\273\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 100 Rev. Econ. & Stat. 1. (2018). Available at:
http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
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Some commenters suggested that the biggest impact on health care
spending and costs would come from self-insured employers who would now
be able to access and use in-network rate data to negotiate lower rates
on behalf of plan participants; improve their provider networks; make
more informed decisions about plan offerings; help steer enrollees to
higher-quality, lower-cost providers; and more meaningfully implement
value-based payment designs. Other commenters stated that the proposed
rules would help create more efficient and value-based health care
systems by encouraging issuers to design innovative benefit designs
that push patients toward lower-cost care. Another commenter stated
that requiring plans and issuers to share publicly their in-network
rates and the allowed amounts paid to out-of-network providers had the
potential to increase competition among plans and issuers.
The Departments are of the view that the requirements in the final
rules will provide providers, plans, and issuers the ability to provide
quality health care services at lower costs to participants,
beneficiaries, or enrollees through enhanced provider and payer
competition.
4. Medical Loss Ratio (45 CFR 158.221)
``Shared savings'' programs allow issuers to share with enrollees
any savings that result from enrollees shopping for, and receiving care
from, lower-cost, higher-value providers. In the final rules, HHS is
amending 45 CFR 158.221(b) to allow health insurance issuers that elect
to offer ``shared savings'' programs to take credit for such ``shared
savings'' payments in their MLR calculations. For this impact estimate,
HHS is assuming that only relatively large issuers (with at least
28,000 enrollees) that have consistently reported investment costs in
health IT on the MLR Annual Reporting Form of at least $10.50 per
enrollee, which represents issuers with 70 percent of total reported
commercial market health IT investment or issuers that operate in
states that currently or may soon support ``shared savings'' plan
designs,\274\ will initially choose to offer plan designs with a
``shared savings''
[[Page 72269]]
component. HHS assumes that such issuers will share, on average, 50
percent of the savings with enrollees (which will increase the MLR
numerator under the final rules), and that issuers whose MLRs were
previously below the applicable MLR standards will use their retained
portion of the savings to lower enrollees' premiums in future years
(which will reduce the MLR denominator). Based on 2017-2019 MLR data,
HHS estimates that this will reduce MLR rebate payments from issuers to
enrollees by approximately $120 million per year, while facilitating
savings that will result from lower medical costs of approximately $154
million per year for issuers and enrollees (some of which will be
retained by issuers, shared directly with enrollees, or used by issuers
to reduce future premium rates).
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\274\ The states that supported ``shared savings'' plan designs
at the time the estimate was developed and therefore were included
in the estimate are Maine, Massachusetts, New Hampshire, and Utah.
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5. Summary of Estimated Transfers
The Departments are assuming that because 2021 premium rates are
nearly finalized, health insurance issuers will not be able to charge
for the expenses incurred to implement the requirements of the final
rules in their 2021 rates. Because issuers will not have the
opportunity to reflect the 2021 development costs in the 2021 premium
rates, some issuers may apply margin to the ongoing expenses as they
develop premium rates for 2022 and after. The Departments estimate
premiums for the fully-insured markets will be $471 billion for 2022,
$494 billion in 2023, $516 billion in 2024, and $539 billion in 2025,
which includes the individual, small group, and large group
markets.\275\ The Departments estimate that the ongoing expense
represents approximately 2.4 percent of projected commercial insured
premiums for the fully-insured market in 2022, 1.4 percent in 2023, and
0.5 percent in 2024 and 2025 (an average of 1.2 percent per year).
Assuming this level of premium increase in the individual market, PTC
outlays are estimated to increase by about $1,047 million in 2022, $623
million in 2023, $216 million in 2024, and $218 million in 2025. Given
that 2022 PTC outlays are expected to be $44 billion,\276\ the
Departments expect that the estimated premium impacts will be
relatively small, and rate increases for subsidized enrollees in the
individual market will largely be mitigated. Therefore, the Departments
expect enrollment impacts to be minimal. The Departments note that any
impact of the final rules on provider prices has not been estimated as
limited evidence has generally shown no predictable impact on provider
prices. As a result, the Departments are assuming that the overall
impact will be minimal. However, there is a large degree of uncertainty
regarding the effect on prices, so actual experience could differ.
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\275\ 2017 earned premium data was taken from amounts reported
for MLR, and trended forward using overall Private Health Insurance
trend rates from the NHE projections.
\276\ OMB 2021 President's Budget. Available at: https://www.whitehouse.gov/wp-content/uploads/2020/02/budget_fy21.pdf.
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The Departments received comments stating that the broader impact
to premiums was not considered in the proposed rules. Several
commenters stated that increased health care prices could be passed
along to consumers, patients, and taxpayers in the form of higher
premiums. Some commenters specifically observed that the cost of
developing and maintaining the required machine-readable files on a
monthly basis would likely be passed on to consumers in the form of
higher premiums. Another commenter noted that employers, TPAs, and
issuers might incur increased costs relative to the rules regarding
potential data breaches, increased liability, and cyber-coverage costs
(liability insurance designed to cover financial losses that result
from data breaches and other cyber events) that could also impact plan
premiums.
Other commenters suggested that use of information in the In-
network Rate File could be used by consumers to engage in practices
that would lead to adverse selection and potentially higher premiums.
One commenter asserted that the proposed rules would allow individuals
to enter the insurance pool for specific costly treatments or
procedures and then drop coverage or switch coverage at the end of the
contract year for a plan with lower premiums, which would result in
higher premiums for all consumers because there is no ability for
health plans to spread the risk across a reliable and long-term
customer base.
By contrast, one commenter observed that premium increases could be
mitigated if low-deductible participants, beneficiaries, or enrollees
were given information about the cost of the health care they utilize,
and that over time price transparency could create lower health care
costs.
The Departments recognize that many issuers and TPAs will likely
transfer the costs associated with meeting the requirements in the
final rules to consumers in the form of increased premiums. However,
the Departments do not currently have enough information or evidence to
determine the overall effects the final rules will have on premiums and
therefore have not estimated how the final rules will impact an
individual's premium. The Departments also note that adverse selection
risk currently exists in the individual market; individuals already
make health care coverage decisions based on their particular health
and financial situations. It is not clear how the price information
contained in the In-network Rate, Allowed Amount, and Prescription Drug
Files will significantly impact an individual's health care coverage
decisions. The Departments do not expect the final rules to
significantly increase the selection risk beyond the levels that
currently exist.
Also, it is questionable how much the final rules will lower health
care costs for low deductible participants, beneficiaries, or enrollees
because cost-sharing amounts are usually much less than the cost of the
services, so that the participants, beneficiaries, or enrollee have no
economic incentive to seek lower cost services. Additionally, evidence
is limited but generally does not show significant differences in
insured participant, beneficiary, or enrollee behavior as a result of
price transparency.
C. Regulatory Review Costs
Affected entities will need to understand the requirements of the
final rules before they can comply. Group health plans and health
insurance issuers are responsible for ensuring compliance with the
final rules. However, as assumed elsewhere, it is expected that issuers
and TPAs (for self-insured group health plans) will incur this cost and
burden for most group health plans, and only the largest self-insured
plans may incur this cost and burden directly. Thus, issuers and TPAs
(and possibly some of the largest self-insured plans) will be
responsible for providing plans with compliant services. The
Departments are currently not aware of any specific number of large
self-insured plans that will seek to meet the requirements of the final
rules without third-party assistance and are thus unable to accurately
account for those plans, however, those plans will incur similar costs
and burdens as TPAs and issuers in order to develop the required tools
and to review and understand the final rules. Therefore, the cost and
burden for the regulatory review is estimated to be incurred by the
1,959 issuers and TPAs. The Departments also are of the view that each
state DOI, 50 states plus the District of Columbia, will need to review
and understand the final rules in order to be able to provide the
appropriate level of oversight and enforcement.
[[Page 72270]]
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret the final rules, the
Departments should estimate the cost associated with regulatory review.
Due to the uncertainty involved with accurately quantifying the number
of entities that will review and interpret the final rules, the
Departments are assuming that the total number of issuers, TPAs, and
state DOIs will be required to comply with the final rules.
Nonetheless, the Departments acknowledge that this assumption may
understate or overstate the costs of reviewing the final rules. It is
possible that not all affected entities will review the final rules in
detail, and some entities may seek the assistance of outside counsel to
read and interpret them. For these reasons, the Departments are of the
view that the number of issuers, TPAs, and DOIs would be a fair
estimate of the number of reviewers of the final rules.
Using the wage information from the Bureau of Labor Statistics
(BLS) \277\ for a Computer and Information Systems Manager (Code 11-
3021), a Lawyer (Code 23-1011) and a state Compliance Officer (Code 13-
1041).\278\ The Departments estimate that the cost for each issuer or
TPA to review the final rules will be $285.66 per hour, including
overhead and fringe benefits, and each state DOI will incur a cost of
approximately $55.58 per hour.\279\ Assuming an average reading speed,
the Departments estimate that it will take approximately two hours for
each staff member to review and interpret the final rules; therefore,
the Departments estimate that the cost of reviewing and interpreting
the final rules for each issuer and TPA will be approximately $571.32
and $111.16 for each state DOI, including the District of Columbia.
Thus, the Departments estimate that the overall cost for the estimated
1,959 issuers and TPAs and each state DOI will be $1,124,885.04
(($571.32 x 1,959 (total number of estimated issuers and TPAs)) +
($111.16 x 51 (total number of DOIs))).
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\277\ Wage information available at https://www.bls.gov/oes/current/oes_nat.htm.
\278\ Wages obtained for State Government, excluding schools and
hospitals at https://www.bls.gov/oes/current/naics4_999200.htm.
\279\ Adjusted hourly wages are determined by multiplying the
mean hourly rate by 100 percent to account for fringe benefits and
overhead costs.
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D. Regulatory Alternatives Considered
In developing the policies contained in the final rules, the
Departments considered alternatives to the final rules. In the
following paragraphs, the Departments discuss the key regulatory
alternatives the Departments considered.
1. Limiting Cost-Sharing Disclosures to Certain Covered Items and
Services, and Certain Types of Group Health Plans and Health Insurance
Issuers
The final rules require group health plans and health insurance
issuers to disclose cost-sharing information for any requested covered
item or service. The Departments considered limiting the number of
items or services for which plans and issuers would be required to
provide cost-sharing information to lessen the costs on these entities.
However, limiting disclosures to a specified set of items and services
reduces the breadth and availability of useful cost estimates to
determine anticipated cost-sharing liability and limits the impact of
price transparency efforts by reducing the incentives to lower prices
and provide higher-quality care. The Departments assumed that plans (or
TPAs on their behalf) and issuers, whether for a limited set of covered
items and services or for all covered items and services, would be
deriving these data from the same data source. Because the data source
would be the same, the Departments assumed that any additional costs to
produce the information required for all covered items and services, as
opposed to a limited set of covered items and services, would be
minimal. The Departments are of the view that this limited additional
cost is outweighed by the potentially large benefit to consumers of
having access to the required pricing information for the full scope of
items and services covered by their plan or issuer. For these reasons,
in order to allow consumers to estimate their out-of-pocket costs for
all services and items covered under their plan or coverage, and to
achieve lower health care costs and reduce spending through increased
price transparency, the final rules are requiring cost-sharing
information be disclosed for all covered items and services. However,
in recognition of commenters' concerns regarding the implementation
timetable for the internet-based self-service tool, the final rules
include a staggered implementation schedule for the disclosure of cost-
sharing information through the internet-based self-service tool.
The Departments also considered implementing a more limited
approach by imposing requirements only on individual market plans and
fully-insured group coverage. However, the Departments are concerned
that this limited approach might encourage plans to simply shift costs
to sectors of the market where these requirements would not apply and
where consumers would have less access to pricing information. The
Departments are of the view that all consumers should be able to access
the benefits of greater price transparency and that a broader approach
will have the greatest likelihood of controlling the cost of health
care industry-wide. Indeed, if the requirements of the final rules were
limited to only individual market plans, the Departments estimate only
9,716,000 individuals would receive the intended benefits of the final
rules. In contrast, under the final rules, a total of 212,314,000
participants, beneficiaries, and enrollees may receive the intended
benefits.\280\ The Departments acknowledge that limiting applicability
of the requirements of the final rules to the individual market would
likely reduce the overall cost estimates identified in section V.B.2,
but the overall cost estimates per covered life would likely increase.
Further, there is a great deal of overlap in issuers that offer
coverage in both the individual and group markets. Issuers offering
coverage in both markets would be required to comply with the
requirements of the final rules even if the Department limited the
applicability to only the individual market. Because TPAs provide
administrative functionality for self-insured group health insurance
coverage, those non-issuer TPA entities would not incur any costs
because they do not have any overlap between the individual and group
markets. The Departments are of the view that the benefits of providing
consumer pricing information to an estimated total 212,314,000
participants, beneficiaries, and enrollees outweigh the increased costs
that a subset of plans, issuers, and TPAs, that are not active
participants in the individual market, would incur. The Departments
have determined that the benefits of the final rules being widely
applicable will not only provide access to health care pricing
information to a greater number of individuals, but that any developed
economies of scale will have a much
[[Page 72271]]
greater likelihood of achieving the goal of controlling the cost of
health care industry-wide.
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\280\ ``Health Insurance Coverage in the United States: 2019''
(Appendix A). United States Census Bureau/September 15, 2020.
Available at: https://www2.census.gov/programs-surveys/demo/tables/p60/271/table1.pdf. The number of covered individuals in the
individual market and the total number of covered individuals have
been updated from those estimated in the proposed rule. The numbers
provided in this final rule are based on more recent data and more
accurately reflect the number of covered individuals in the private
market (excluding those enrolled in Tricare coverage). The data
provided is for 2019, whereas the data presented in the proposed
rule was derived from multiple sources for multiple years (2016 and
2019).
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As noted in section I.B of this preamble, in the summer and fall of
2018, HHS hosted listening sessions in which attendees stated that
existing tools usually use historical claims data, which results in
broad, sometimes regional, estimates, rather than accurate and
individualized prices. The Departments considered allowing plans and
issuers to use rate information from historical claims data to
calculate price estimates. The Departments recognize that many plans
and issuers use historical claims data to inform and determine cost-
sharing estimates, but the Departments are of the view that using
pricing information such as negotiated rates will provide for a more
accurate and reliable estimate. Providing more accurate estimates of
consumer prices will provide more benefit to consumers, allowing them
to better estimate their potential out-of-pocket costs and search for
items and services they feel are more affordable.
2. Requirement To Make Available Machine-Readable Files of In-Network
Rates, Historical Data for Out-of-Network Allowed Amount Payments Made
to Out-of-Network Providers, and Prescription Drug Pricing Information
on a Public Website
In proposing the requirement that group health plans and health
insurance issuers post in-network rates, historical data for out-of-
network allowed amount payments made to out-of-network providers, and
negotiated rates and historical net prices for each prescription drug
on a publicly accessible website, the Departments considered requiring
plans and issuers to submit the internet addresses for the machine-
readable files to CMS. CMS would then make the information available to
the public from CMS's website. A central location could allow the
public to access in-network rate information, out-of-network allowed
amounts, and prescription drug information for all plans and issuers in
one place, potentially reducing confusion and increasing accessibility.
Posting in-network rates, out-of-network allowed amounts, and
prescription drug information in a central location might also make it
easier to post available quality information alongside price
information. However, to provide flexibility and reduce costs, the
Departments are of the view that plans and issuers should determine
where to post the in-network rate, out-of-network allowed amount, and
prescription drug information rather than prescribing the location
where the information is to be disclosed. Further, requiring plans and
issuers to submit internet addresses for their machine-readable files
to CMS would result in additional costs to the extent plans and issuers
already post this information in a different location.
3. Frequency of Updates to Machine-Readable Files
In developing 26 CFR 54.9815-2715A3(b)(3), 29 CFR 2590.715-
2715A3(b)(3), and 45 CFR 147.212(b)(3) of the final rules, the
Departments considered requiring more frequent updates (i.e., within 10
calendar days of new rate finalization) to the in-network rates, out-
of-network allowed amounts, and prescription drug information. More
frequent updates would provide a number of benefits for patients,
providers, and the public at large. Specifically, such a process would
ensure that the public has access to the most up-to-date rate
information so that consumers can make the most meaningful, informed
decisions about their health care utilization. Requiring group health
plans, health insurance issuers, and TPAs (or other entity acting on a
plan or issuers behalf) to update the machine-readable files more
frequently would result in increased costs for those affected entities,
however. With respect to the In-network Rate File, the Departments
estimate that requiring updates within 10 calendar days of rate
finalization would result in each plan, issuer, or TPA incurring a
burden of 4,428 hours, with an associated equivalent cost of $635,112
in the second year after implementation of the final rules and an
annual burden of 1,116 hours, with an associated equivalent cost of
$162,828 in subsequent years. Based on recent data the Departments
estimate a total 1,959 entities--1,754 issuers \281\ and 205 TPAs
\282\--will be responsible for implementing the final rules. For all
1,959 issuers and TPAs, the total burden, in the second year of
implementation of the final rules, would be 8,674,452 hours, with an
associated equivalent cost of $1,244,184,408 and an annual ongoing
burden of 2,186,244 hours, with an associated ongoing annual costs of
$318,980,052 in subsequent years. As discussed in section VI.A.2,
requiring a less frequent 30 calendar day update will reduce the
burden, in year two, for each entity to 1,476 hours with an associated
equivalent cost of $211,704. The burden and associated costs, in
subsequent years, will be reduced to 372 hours, with an associated cost
of $54,276. For all 1,959 issuers and TPAs, the total burden, in year
two, is reduced to 2,891,484 hours, with and associated equivalent cost
of $414,728,136. For subsequent years, the total burden is reduced to
728,748 hours, with an associated equivalent cost of $106,326,684. With
respect to the Allowed Amount File, the Departments estimate that
requiring updates within 10 calendar days of rate finalization would
result in each plan, issuer, or TPA incurring a burden of 1,908 hours,
with an associated equivalent cost of $290,628 in the second year and
an annual ongoing burden of 468 hours, with an associated equivalent
cost of $61,452 in subsequent years. For all 1,959 issuers and TPAs,
the total burden, in year two, would be 3,737,772 hours with and
associated equivalent cost of $569,340,252. For subsequent years, the
total ongoing burden would be 916,812 hours, with an associated
equivalent cost of $120,384,468. As further discussed in section
VI.A.2, requiring a less frequent update will reduce the year two
burden for each issuer and TPA to 636 hours, with an associated
equivalent cost of $96,876. For subsequent years, the total ongoing
burden will be reduced to 156 hours, with an associated equivalent cost
of $20,848. For all 1,959 issuers and TPAs, the total burden for year
two is reduced to 1,245,924 hours, with an associated equivalent cost
of $189,780,084. For subsequent years, the total ongoing burden will be
reduced to 305,604 hours, with an associated equivalent cost of
$40,128,156. With respect to the Prescription Drug File, the
Departments estimate that requiring updates within 10 calendar days of
rate finalization would result in each plan, issuer, or TPA incurring a
burden of 2,700 hours, with an associated equivalent cost of $416,664
in the second year and an annual ongoing burden of 1,116 hours, with an
associated equivalent cost of $162,828 in subsequent years. For all
1,959 issuers and TPAs, the total burden, in year two, would be
5,289,300 hours with and associated equivalent cost of $816,244,776.
For subsequent years, the total ongoing burden would 2,186,244 hours,
with an associated equivalent cost of $318,980,052. As discussed in
section VI.A.2, requiring a less frequent update will reduce the year
two burden for each issuer and TPA to 900 hours, with an associated
equivalent cost of $138,888. For subsequent years, the total ongoing
burden will be reduced to 372 hours,
[[Page 72272]]
with an associated equivalent cost of $54,276. For all 1,959 issuers
and TPAs, the total burden for year two is reduced to 1,763,100 hours,
with an associated equivalent cost of $272,081,592. For subsequent
years, the total ongoing annual burden will be reduced to 728,748
hours, with an associated equivalent cost of $106,326,684. By requiring
monthly updates to the machine-readable files, rather than updates
every 10 calendar days, the Departments have chosen to strike a balance
between placing a significant burden on issuers (and their service
providers) and assuring the availability of accurate information.
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\281\ 2018 MLR Data Trends.
\282\ Non-issuer TPAs based on data derived from the 2016
Benefit Year reinsurance program contributions.
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4. File Format Requirements
In 26 CFR 54.9815-2715A3(b)(2), 29 CFR 2590.715-2715A3(b)(2), and
45 CFR 147.212(b)(2), the final rules require group health plans and
health insurance issuers to post information in three machine-readable
files. A machine-readable file is defined as a digital representation
of data or information in a file that can be imported or read by a
computer system for further processing without human intervention,
while ensuring no semantic meaning is lost. The final rules require
each machine-readable file to use a non-proprietary, open format. The
Departments considered requiring issuers and TPAs to post in-network
rates, allowed amounts paid for out-of-network services, and
prescription drug information using a specific file format, namely
JSON. However, the Departments are of the view that being overly
prescriptive regarding the file type will impose an unnecessary costs
on issuers and TPAs despite the advantages of JSON, namely that JSON
files are downloadable and readable for many health care consumers, and
the potential for JSON to simplify the ability of price transparency
tool developers to access the data. Therefore, the Departments are
requiring that issuers and TPAs post the in-network rate, allowed
amount, and prescription drug pricing information in three distinct
machine-readable files using a non-proprietary, open format. The
Departments will provide additional guidance regarding the file format
in future technical implementation guidance.
In addition, the Departments considered requiring plans and issuers
to provide the specific out-of-network allowed amount methodology
needed for consumers to determine out-of-pocket liability for services
by providers not considered in-network by the plan or issuer, rather
than historical data on paid out-of-network claims. However, the
Departments understand providing a formula or methodology for
calculating a provider's out-of-network allowed amount does not provide
the data users need in an easy-to-use machine-readable format. The
Departments determined that providing monthly data files on allowed
amounts by plans and issuers over a 90-day period for items and
services provided by out-of-network providers will enable users to more
readily determine what costs a plan or issuer may pay toward items or
services obtained out-of-network. Because a plan or issuer does not
have a contract with an out-of-network provider that establishes
negotiated rates, the plan or issuer cannot anticipate what that
provider's charges will be for any given item or service; therefore,
the Departments, as discussed previously in this preamble, are
requiring the inclusion of billed charges in the Allowed Amounts File.
Providing data on the billed charge in connection with each unique
allowed amount on the out-of-network Allowed Amount File will provide
consumer with information related to what their plan or issuer will
likely contribute to the costs of items or services obtained from out-
of-network providers and the billed charges associated with those item
or services. This information will provide the consumer with a
reasonably accurate estimate of the amount of additional liability a
consumer could be required to pay for a particular item or service
received from an out-of-network provider. Out-of-network allowed amount
and billed charges data will provide increased price transparency for
consumers, and the costs related to producing these data are not
considered to be significantly higher than that associated with
producing the methodology for determining allowed amounts for payments
to out-of-network providers. Given these circumstances, the final rules
are requiring that payers provide allowed amount data for out-of-
network covered items or services furnished by a particular out-of-
network provider during the 90-day time period that begins 180 days
prior to the publication date of the Allowed Amount File, and billed
charges rather than requiring plans and issuers to report their
methodology or formula for calculating the allowed amounts for out-of-
network items and services.
5. Requiring Disclosure of Cost-Sharing Information to Participants,
Beneficiaries, and Enrollees and Publicly-Posted Machine-Readable Files
With In-Network Rates, Out-of-Network Allowed Amounts, and Prescription
Drug Pricing Information
The Departments considered whether it would be duplicative to
require group health plans and health insurance issuers to disclose
cost-sharing information through an internet-based self-service tool or
in paper form to participants, beneficiaries, or enrollees so that they
may obtain an estimate of their cost-sharing liability for covered
items and services and publicly-posted machine-readable files
containing data on in-network rates, out-of-network allowed amounts,
and prescription drug pricing information. The requirement to disclose
cost-sharing information to participants, beneficiaries, or enrollees
in the final rules require plans and issuers to provide consumer-
specific information on potential cost-sharing liability to enrolled
consumers, complete with information about their deductibles, copays,
and coinsurance. However, cost-sharing information for these plans and
coverage would not be available or applicable to consumers who are
uninsured or shopping for plans pre-enrollment. Data disclosed to
participants, beneficiaries, or enrollees would also not be available
to third parties who are interested in creating internet-based self-
service tools to assist both uninsured and insured consumers with
shopping for the most affordable items or services. Limiting access to
data to a subset of consumers would not promote the transparency goals
of the final rules and would reduce the potential for the final rules
to drive down health care costs by increasing competition.
As discussed in more detail in section VI.A.1 in this preamble, the
Departments have estimated the high-end three-year average annual cost
to develop only the internet-based self-service tool, including the
initial tool build and maintenance, customer service training, customer
assistance, and mailing costs. The Departments estimate the three-year
average total burden per issuer, or TPA will be approximately 23,338
hours, with an associated equivalent average annual cost of
approximately $3,262,262. For all 1,959 issuers and TPAs, the
Departments estimate the total three-year average annual burden will be
45,718,171 hours with an associated equivalent total average annual
cost of approximately $6,390,770,952.
[[Page 72273]]
Additionally, the Departments estimated that for implementation of
the required internet-based self-service tool in conjunction with the
out-of-network allowed amount, in-network and prescription drug
machine-readable files, the Departments estimate that the annual high-
end three-year average annual costs and burden for each issuer or TPA
will be approximately 28,958 hours, with an associated equivalent cost
of approximately $4,040,142. For all 1,959 issuers and TPAs, the
Departments estimate the total three-year average annual burden and
cost to be 56,727,751 hours with an associated equivalent total average
annual cost of approximately $7,914,635,260.
In contrast, and as discussed in more detail in section VI.A.1, the
Departments estimate that the low-end three-year average burden and
cost to develop and maintain only the internet-based self-service tool,
including the initial tool build and maintenance, customer service
training, customer assistance, and mailing costs. The Departments
estimate the total three-year average cost and burden per issuer or TPA
will be approximately 15,475 hours, with an associated equivalent
average annual cost of approximately $2,150,169. For all 1,959 issuers
and TPAs, the Departments estimate the total three-year average annual
burden to be 30,315,730 hours with an associated equivalent total
average annual cost of approximately $4,212,181,157.
Finally, the Departments estimated that for implementation of the
required internet-based self-service tool in conjunction with the out-
of-network allowed amount, in-network rate, and prescription drug
machine-readable files, the Departments estimate that the three-year
average annual low-end cost and burden for each issuer or TPA will be
approximately 21,095 hours, with an associated equivalent average
annual cost of approximately $2,928,048. For all 1,959 issuers and
TPAs, the Departments estimate the total three-year average annual low-
end burden and cost will be 41,325,310 hours with an associated
equivalent total average annual cost of approximately $5,736,045,465.
While the Departments recognize that requiring disclosures through all
mechanisms will increase the costs for issuers and TPAs required to
comply with the final rules, the Departments are of the view that the
additional costs associated with greater price transparency are
outweighed by the benefits that will accrue to the broader group of
consumers (such as the uninsured and individuals shopping for coverage)
and other individuals who would benefit directly from the additional
information provided through the machine-readable files. Additionally,
the Departments are of the view that the final rules have the potential
to reduce the cost of surprise billing to consumers. The Departments
further believe that the final rules will, with the disclosure of in-
network rates, potentially apply pressure on providers to bill less
aggressively. Consumer advocacy groups could also use the wide price
dispersion of the same CPT level service or NDC level drug by the same
providers with different negotiated rates, depending upon issuer or TPA
contract, to further place downward pressure on health care costs. In
addition, as noted earlier in section II.C.1-2 of this preamble,
researchers and third-party developers will also be able to use the
data included in the machine-readable files in a way that could create
even more benefits to consumers, including those consumers not
currently enrolled in a particular plan or coverage. For these reasons,
the Departments have concluded that, in addition to requiring plans and
issuers to disclose cost-sharing information to participants,
beneficiaries, or enrollees through an internet-based self-service
tool, requiring plans and issuers to publicly disclose information
regarding in-network rates, out-of-network allowed amounts, and
prescription drug pricing will further the goals of price transparency
and create benefits for all potentially affected stakeholders.
6. Requiring an Internet-Based Self-Service Tool and Machine-Readable
Files in Lieu of an API
The Departments considered whether to require group health plans
and health insurance issuers to make the information required by the
final rules available through a standards-based API, instead of through
the proposed internet-based self-service tool and machine-readable
files. Access to pricing information through an API could have a number
of benefits for consumers, providers, and the public at large. This
information could ensure the public has access to the most up-to-date
rate information. Providing real-time access to pricing information
through a standards-based API could allow third-party innovators to
incorporate the information into applications used by consumers or
combined with electronic medical records for point-of-care decision-
making and referral opportunities by clinicians for their patients.
Additionally, being able to access this data through a standards-based
API would allow consumers to use the application of their choice to
obtain personalized, actionable health care price estimates, rather
than being required to use one developed by their plan or issuer (or a
service provider), although those consumers may be required to pay for
access to those applications.
While there are many benefits to a standards-based API, it is the
Departments' view that both an internet-based tool and machine-readable
files are the first iterative steps towards developing price
transparency standards-based APIs. It is the Departments' view that
standards-based API would be a natural next technological step. The
Departments also recognize that the majority of issuers have an
existing internet-based tool that could be enhanced to meet the
disclosure requirements in the final rules. The burden associated with
updating existing tools to standardize data attributes is going to be
less than building a standards-based API. Looking at the average cost
over a 3-year period for the API for all 1,959 issuers and TPAs, the
Departments estimate an average annual cost that would significantly
exceed the estimated annual cost of implementing the internet-based
self-service tool and machine-readable files. The Departments recognize
that the development of an API may be streamlined by leveraging
existing APIs currently used by plans, issuers, or TPAs for their own
applications. Additionally, any requirements for an API would build on
the requirements finalized in CMS's Interoperability & Patient Access
final rule \283\ requiring certain entities, such as Federally-
facilitated Exchange QHP issuers and companies that participate in both
Medicare and the individual or group market, to provide certain data
through a standards-based API. Building on the Interoperability &
Patient Access final rule could result in significantly lower costs for
issuers and TPAs as it relates to the development and implementation of
a standards-based API. Nonetheless, while the Interoperability &
Patient Access final rule focuses on the disclosure of information
regarding post care and clinical data, the rules finalized here require
plans and issuers to provide information related to a participant's,
beneficiary's, or enrollee's individual's cost-sharing, allowed amounts
for covered items and services from out-of-network providers, and
negotiated rates and historical net prices for each prescription drug
prior to seeking or obtaining care. The Departments are therefore of
the view
[[Page 72274]]
that plans, issuers, and TPAs would incur significant and distinct
costs if required to us a standards-based API to comply with the final
rules.
---------------------------------------------------------------------------
\283\ 85 FR 25510 (May 1, 2020).
---------------------------------------------------------------------------
Although not estimated here, the Departments expect any associated
maintenance costs would also decline in succeeding years as plans,
issuers, and TPAs gain additional efficiencies or undertake similar
procedures to maintain any currently used internal APIs. Nonetheless,
weighing the costs of providing the required information using an
internet-based self-service tool and machine-readable files against the
potential costs of using a standards-based API, particularly given the
timeframes required by the final rules, the Departments are of the view
that, at least in the short-term, requiring an internet-based self-
service tool and machine-readable files is the more sensible approach.
Even though the Departments are of the view that an internet-based
self-service tool and machine-readable files are appropriate in the
short-term, as discussed earlier in this preamble, the Departments
recognize that a standards-based API format in the long-term may be
more beneficial to the public, as it would provide access to the most
up-to-date rate information; would allow health care consumers to use
the application of their choice to obtain personalized, actionable
health care service price estimates; and would allow third-party
developers to use the collected data to develop internet-based self-
service tools. Therefore, the Departments are considering future
rulemaking to further expand access to pricing information through
standards-based APIs, including individuals' access to estimates about
their own cost-sharing liability and information about in-network
rates, historical payment data for out-of-network allowed amounts, and
negotiated rates and historical net prices for prescription drugs.
VI. Collection of Information Requirements
The final rules contain ICRs that are subject to review by OMB. A
description of these provisions is given in the following paragraphs
with an estimate of the annual burden, summarized in Table 24.
To fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA requires that the
Departments solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of each of the Departments.
the accuracy of the Departments' estimate of the
information collection burden.
the quality, utility, and clarity of the information to be
collected.
recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
The Departments solicited comment on each of the required issues
under section 3506(c)(2)(A) of the PRA for the following information
collection requirements.
A. Wage Estimates
To derive wage estimates, the Departments generally use data from
the BLS to derive average labor costs (including a 100 percent increase
for fringe benefits and overhead) for estimating the burden associated
with ICRs.\284\ One commenter noted that the markup rates for labor,
fringe benefits, and overhead are underestimated at 100 percent, while
the conventional standard is 200 percent to 300 percent. The commenter
further stated that if the Departments were to update the burden
estimates with the conventional standard for overhead markup, the total
of annual quantified costs would increase to over $500 million per
year.
---------------------------------------------------------------------------
\284\ May 2018 Bureau of Labor Statistics, Occupational
Employment Statistics, National Occupational Employment and Wage
Estimates. Available at: https://www.bls.gov/oes/current/oes_stru.htm.
---------------------------------------------------------------------------
The Departments acknowledge that there are various methodologies
used to determine and estimate fringe benefits and other overhead
costs; however, the commenter did not provide any source recognizing or
supporting their assertion that the conventional standard is to use 200
percent to 300 percent increases. The Departments agree that if a
higher percentage were used to estimate hourly wages and overhead, then
the estimated costs for the final rules could potentially be
significantly higher. However, the Departments note that the use of 100
percent is necessarily a rough adjustment, both because fringe benefits
and overhead costs vary significantly across employers, and because
methods of estimating these costs vary widely across studies. The
Departments are of the view that doubling the hourly wage to estimate
total cost is a reasonably acceptable estimation method.
The Departments recognize that the maturity of technology will vary
from organization to organization. An independent study by Bates White
Economic Consulting (Bates White), commissioned by one commenter,
developed an assessment of the costs of the proposed rules by
interviewing a mix of 18 large and small health insurance issuers
covering about 78 million lives. They reported various degrees of
existing tools' compliance with the requirements of the proposed rules.
The Departments reevaluated its initial burden estimates developed for
the proposed rules based on feedback from commenters and the Bates
Whites study. Because the Departments could not make an estimate for
any specific issuer, an independent government cost estimate (IGCE) was
conducted for each of the machine-readable files and the internet-based
self-service tool to aid the Departments in conducting the burden and
cost estimates for the final rules. The goals of an IGCE are to aid the
government acquisition process in determining a project's cost
estimates based on project requirements or objectives that are
typically found in a performance work statement or statement of work.
IGCEs are developed by the government without contractor influence and
are based on market research. The estimated skill sets required to
build both the internet based self-service tool and machine-readable
files can be found in TABLE 3 below. The Departments based the IGCE
cost estimates on the rule's requirements and each IGCE has baseline
assumptions that are built into the final estimate.
The IGCE assumptions for the internet-based self-service tool
included things such as research, engineering development, and design
and were not based on any existing tools. There was an assumption that
product development would be done in the cloud to take advantage of
economies of scale or with on-premise infrastructure that allows for
the development of ``infrastructure as code.'' The IGCE assumptions for
the machine-readable files included that all items and services for a
specific plan have a negotiated price, that all price numbers are
digitized, that pricing information is stored in many locations (not in
a single database), that pricing information is accessible through
internal systems, that building the first machine-readable file will
facilitate automation for building future machine-readable files, and
that there is an ability to run queries against claims data.
Based on comments discussed later sections VI.A.1-2, the
Departments have chosen to use the Contract Awarded Labor Category
(CALC) \285\ database tool, managed by the General Services
Administration (GSA), to derive the
[[Page 72275]]
hourly rates for the burden and cost estimates in the final rules. The
CALC tool was built to assist acquisition professionals with market
research and price analysis for labor categories on multiple U.S. GSA &
Veterans Administration (VA) contracts. Wages obtained from the CALC
database are fully burdened to account for fringe benefits and overhead
costs. The Departments chose to use wages derived from the CALC
database because, even though the BLS data set is valuable to
economists, researchers, and others that would be interested in larger,
more macro-trends in parts of the economy, the CALC data set is meant
to help market research based on existing government contracts in
determining how much a project/product will cost based on the required
skill sets needed. The CALC data set also factors in the fully-burdened
hourly rates (base pay + benefits) into wages whereas BLS rates do not.
CALC occupations and wages provide the Departments with data that
aligns more with, and provides more detail related to, the occupations
required for the implementation of the requirements in the final rules.
As discussed earlier, after consideration and discussion of comments,
the Departments chose to further reevaluate the cost and burden
estimates. Based on the Departments consultation with internal and
external IT professionals and additional research, the Departments have
chosen to increase our overall costs and burden estimates to account
for our updated understanding of the burdens associated with the final
rules and the additional requirements included in the final rules. The
Departments further discuss changes to the final cost and burden
estimates in the corresponding ICR sections.
---------------------------------------------------------------------------
\285\ CALC information and wage rates are available at: https://calc.gsa.gov/about/.
---------------------------------------------------------------------------
While the following estimates for the internet-based self-service
tool assume that entities are either iterating on an existing tool or
building a brand new tool from the ground up, the Departments are of
the view that it is highly likely that third-party developers will take
this opportunity to build white-label products that meet the
requirements of the final rules and that they will reduce costs through
economies of scale by doing so. As such, the Departments' cost
estimates may have some tendency towards over-estimation.
Table 3 presents the fully burdened hourly wage and job
descriptions used in the Departments' estimates.
Table 3--Hourly Wages Used in Burden Estimates
------------------------------------------------------------------------
Mean
hourly
CALC occupation title wage ($/
hour)
------------------------------------------------------------------------
Project Manager/Team Lead.................................... $153.00
Scrum Master................................................. 105.00
Technical Architect/Sr. Developer............................ 149.00
Application Developer, Senior................................ 143.00
Business Analyst............................................. 120.00
UX Researcher/Service Designer............................... 154.00
Designer..................................................... 116.00
DevOps Engineer.............................................. 181.00
Customer Service Representative.............................. 40.00
Web Database/Application Developer IV........................ 152.00
Service Designer/Researcher.................................. 114.00
------------------------------------------------------------------------
1. ICR Regarding Requirements for Disclosures to Participants,
Beneficiaries, or Enrollees (26 CFR 54.9815-2715A2, 29 CFR 2590.715-
2715A2, and 45 CFR 147.211)
The Departments add 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-
2715A2(b), and 45 CFR 147.211(b), requiring group health plans and
health insurance issuers of individual and group health insurance
coverage to disclose, upon request, to a participant, beneficiary, or
enrollee, such individual's cost-sharing information for items;
negotiated rates and underlying fee schedule rates for in-network
providers; and allowed amounts for covered items and services from out-
of-network providers. As discussed previously in section II.B.1 of this
preamble, in paragraphs 26 CFR 54.9815-2715A2(b)(1)(i), 29 CFR
2590.715-2715A2(b)(1)(i), and 45 CFR 147.211(b)(1)(i) through (vii) the
final rules require plans and issuers to make this information
available through an internet-based self-service tool on an internet
website and, if requested, in paper form or other format agreed upon
between the plan, issuer, or TPA and participant, beneficiary, or
enrollee.
The final rules require plans and issuers to disclose, upon
request, certain information relevant to a determination of a
participant's, beneficiary's, or enrollee's cost-sharing liability for
a particular health care item or service from a particular provider, to
the extent relevant to the individual's cost-sharing liability for the
item or service, in accordance with seven content elements: The
individual-specific estimated cost-sharing liability; the individual-
specific accumulated amounts; the in-network rate; the out-of-network
allowed amount for a covered item or service, if applicable; the items
and services content list when the information is for items and
services subject to a bundled payment arrangement; a notice of
prerequisites to coverage (such as prior authorization); and a
disclosure notice. However, as discussed earlier in this section II.B.1
of this preamble, in instances where items or services, generally
considered preventive, are furnished as non-preventive items or
services, the participant, beneficiary, or enrollee may be subject to
the cost-sharing terms of his or her plan. If a plan or issuer cannot
determine whether the request is for a preventive item or service, the
plan or issuer must display the non-preventive cost-sharing liability,
along with a note that the item or service may not be subject to cost-
sharing if it is billed as a preventive service. The final rules also
require the disclosure notice to include several statements, written in
plain language, which include disclaimers relevant to the limitations
of the cost-sharing information disclosed, including: A statement that
out-of-network providers may balance bill participants, beneficiaries,
or enrollees, a statement that the actual charges may differ from those
for which a cost-sharing liability estimate is given, and a statement
that the estimated cost-sharing liability for a covered item is not a
guarantee that coverage will be provided for those items and services.
In addition, plans and issuers will be permitted to add other
disclaimers they determine appropriate so long as such information is
not in conflict with the disclosure requirements of the final rules.
The Departments have developed model language that plans and issuers
will be able to use to satisfy the requirement to provide the notice
statements described earlier in section II.B.1 of this preamble.
As discussed in section II.B.1 of this preamble, the final rules
require plans and issuers to make available the information described
in 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-2715A2(b), and 45 CFR
147.211(b) of the final rules through an internet-based self-service
tool. The information is required to be provided in plain-language
through real-time responses. Plans and issuers will be required to
allow participants, beneficiaries, or enrollees to search for cost-
sharing information for covered items and services by billing code, or
by descriptive term, per the user's request, in connection with a
specific in-network provider, or for all in-network providers. In
addition, the internet-based self-service tool must allow users to
input information necessary to determine the out-of-network allowed
amount for a covered item or service
[[Page 72276]]
provided by an out-of-network provider (such as zip code). The
internet-based self-service tool is required to have the capability to
refine and reorder results by the geographic proximity of in-network
providers, and the estimated amount of cost-sharing liability to the
beneficiary, participant, or enrollee.
As discussed in sections II.B.1 and 2 earlier in this preamble, the
final rules require plans and issuers to furnish upon request, in paper
form, the information required to be disclosed under 26 CFR 54.9815-
2715A2(b)(1), 29 CFR 2590.715-2715A2(b)(1), and 45 CFR 147.211(b)(1) of
the final rules to a participant, beneficiary, or enrollee. As
discussed in sections II.B.1 and 2 in this preamble, a paper disclosure
is required to be furnished according to the consumer's filtering and
sorting preferences and mailed to the participant, beneficiary, or
enrollee within two business days of receiving the request. Plans or
issuers may, upon request, provide the required information through
other methods, such as over the phone, through face-to-face encounters,
by facsimile, or by email.
The Departments assume fully-insured group health plans will rely
on issuers to develop and maintain the internet-based self-service tool
and provide any requested disclosures in paper form. While the
Departments recognize that some self-insured plans might independently
develop and maintain the internet-based self-service tool, at this time
the Departments assume that self-insured plans will rely on TPAs
(including issuers providing administrative services and non-issuer
TPAs) to develop the required internet-based self-service tool. The
Departments make this assumption because the Departments understand
that most self-insured group health plans rely on TPAs for performing
most administrative duties, such as enrollment and claims processing.
For those self-insured plans that choose to develop their own internet-
based self-service tools, the Departments assume that they will incur a
similar cost and burden as estimated for issuers and TPAs, as discussed
in section VI.A.1 later in this preamble. In addition, 26 CFR 54.9815-
2715A2(b)(3), 29 CFR 2590.715-2715A2(b)(3), and 45 CFR 147.211(b)(3) of
the final rules provide for a special rule to prevent unnecessary
duplication of the disclosures with respect to health insurance
coverage, which provides that a plan may satisfy the disclosure
requirements if the issuer offering the coverage is required to provide
the information pursuant to a written agreement between the plan and
issuer. Thus, the Departments have used issuers and TPAs as the unit of
analysis for the purposes of estimating required changes to IT
infrastructure and administrative costs and burdens. The Departments
estimate approximately 1,754 issuers and 205 TPAs will be affected by
the final rules.
The Departments acknowledge that the costs described in these ICRs
may vary depending on the number of lives covered, the number of
providers and items and services for which cost-sharing information
must be disclosed, and the fact that some plans and issuers already
have robust tools that can be easily adapted to meet the requirements
of the final rules. In addition, plans and issuers may be able to
license existing cost estimator tools offered by third-party vendors,
obviating the need to establish and maintain their own internet-based
self-service tools. The Departments assume that any related vendor
licensing fees would be dependent upon complexity, volume, and
frequency of use, but assume that such fees would be lower than an
overall initial build and associated maintenance costs. Nonetheless,
for purposes of the estimates in these ICRs, the Departments assume all
1,959 issuers and TPAs will be affected by the final rules. The
Departments also developed the following estimates based on the mean
average size, by covered lives, of issuers or TPAs. As noted later in
this section, the Departments sought comment on the inputs and
assumptions that were used to develop these cost and burden estimates,
particularly regarding existing efficiencies that would reduce the cost
and burden estimates.
High Range Estimate for Internet-Based Self-Service Tool From Start-Up
to Operational Functionality
The Departments estimate that the one-time costs and burden each
issuer or TPA will incur to complete the one-time technical build;
including activities such as planning, assessment, budgeting,
contracting, building and systems testing, incorporating any necessary
security measures, incorporating disclaimer and model notice language,
or development of the model and disclaimer notice materials for those
that choose to make alterations. The Departments assume that this one-
time cost and burden will be incurred in 2022 to develop and build the
internet-based self-service tool and provide information for the 500
required items and services, and additional one-time costs will be
incurred in 2023 in order to fully meet the requirements of the final
rules. As mentioned earlier in section V.A.2 of this preamble, the
Departments acknowledge that a number of issuers and TPAs have
previously developed some level of internet-based self-service tool
similar to, and containing some functionality related to, the
requirements in the final rules. The Departments thus seek to estimate
a burden and cost range (high-end and low-end) associated with the
final rules for those issuers and TPAs. In order to develop the high-
end hourly burden and cost estimates, the Departments assume that all
issuers and TPAs will need to develop and build their internet-based
self-service tool from start-up to operational functionality. The
Departments estimate that for each issuer or TPA it will take a Project
Manager/Team Lead 4,160 hours (at $153 per hour), a Scrum Master 4,160
hours (at $105 per hour), a Technical Architect/Sr. Developer 4,160
hours (at $149 per hour), an Application Developer, Senior 4,160 hours
(at $143 per hour), a Business Analyst 4,160 hours (at $120 per hour),
a UX Researcher/Service Designer 4,160 hours (at $154 per hour), a
Designer 4,160 hours (at $116 per hour), a DevOps Engineer 4,160 hours
(at $181 per hour), and a Web Database/Application Developer IV 4,160
hours to complete this task. The Departments estimate the total burden
per issuer or TPA will be approximately 37,440 hours, with an
equivalent cost of approximately $5,295,680. For all 1,959 issuers and
TPAs, the total first year one-time total burden is estimated to be
73,344,960 hours, with an equivalent total cost of approximately
$10,374,237,120. The Departments' estimates are higher-bound estimates
that do not consider potential cost savings that could be realized
should issuers and TPAs buy or lease an internet-based self-service
tool from a third-party vendor or other issuer. However, the
Departments are of the view that issuers or TPAs that choose to buy or
rent an internet-based self-service tool from another entity could
incur significantly less costs and burdens.
[[Page 72277]]
Table 4A--Total High-End First Year Estimated One-Time Cost and Hour Burden for Internet-Based Self-Service Tool
for Each Issuer or TPA
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost Total cost per
CALC occupation per respondent per hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead..................................... 4,160 $153.00 $636,480.00
Scrum Master.................................................. 4,160 105.00 436,800.00
Technical Architect/Sr. Developer............................. 4,160 149.00 619,840.00
Application Developer, Senior................................. 4,160 143.00 594,880.00
Business Analyst.............................................. 4,160 120.00 499,200.00
UX Researcher/Service Designer................................ 4,160 154.00 640,640.00
Designer...................................................... 4,160 116.00 482,560.00
DevOps Engineer............................................... 4,160 181.00 752,960.00
Web Database/Application Developer IV......................... 4,160 152.00 632,320.00
-------------------------------------------------
Total per respondent.......................................... 37,440 .............. 5,295,680.00
----------------------------------------------------------------------------------------------------------------
Table 4B--Total High-End First Year Estimated One-Time Cost and Hour Burden for Internet-Based Self-Service Tool
for All Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 37,440.0 73,344,960 $10,374,237,120
----------------------------------------------------------------------------------------------------------------
Several commenters stated that the Departments grossly
underestimated the cost burden of implementation on plans and issuers.
One commenter stated that surveyed issuers estimated an average cost of
$6.2 million to build, develop or modify, implement, test, and launch
an internet-based self-service tool. This is 28 times greater than the
Departments' proposed estimate for an issuer that needs to build a new
tool and 112 times greater than the Departments' estimate for an issuer
that has an existing tool. Furthermore, this commenter noted that
surveyed issuers estimated average annual maintenance costs of $1.4
million per issuer--over 100 times greater than those anticipated by
the Departments. Surveyed issuers also estimated set-up costs that
averaged about $5.53 million (ranging from $1,000,000 to $15,000,000)
compared to the Departments' proposed estimate of $221,029. This is
more than 25 times what the Departments estimated as the cost for a
full build of the internet-based self-service tool. Although most of
the issuers surveyed had an existing internet-based self-service tool
meeting many of the required elements of the final rules, several
issuers expressed significant concern about the cost and feasibility of
complying with the requirements of the proposed rules. Specifically,
the issuers surveyed expressed concerns noting that the requirements
may necessitate a complete rebuild of their consumer tool. The surveyed
issuers further indicated that the proposed rules would be costlier
than implementing real-time claims adjudication, in which the claim for
the medical service is adjudicated at the time the service is provided.
They stated that they would need to effectively adjudicate the claim
before it actually happens--to provide estimates for every conceivable
type of medical item or service while integrating this information with
various benefits. The surveyed issuers also noted that condensing all
of the detail required in the final rules into a user-friendly format
for use by enrollees would be a considerable and possibly even
infeasible challenge. They further stated that the Departments'
assumption that issuers with an existing internet-based self-service
tool would face a lower hour burdens and costs to comply with the
proposed rules was incorrect.
The Departments have considered the comments submitted in response
to the cost and burden estimates related to the internet-based self-
service tool. In response, the Departments have adjusted the costs and
burden estimates to better reflect and align with the values submitted
by commenters. In addition, the Departments have developed the
estimates above, and in other ICR sections, using CALC wage rates as
discussed in section VI.A of this preamble.
Low Range Estimate for Internet-Based Self-Service Tool Requiring
Partial Build
The Departments recognize that a significant number of issuers and
TPAs may already have some form of internet-based self-service tool
that allows for comparison shopping of different plans and that a large
number of issuers and TPAs may currently provide participants,
beneficiaries, or enrollees with the ability to obtain some estimated
out-of-pocket costs.\286\ For those issuers and TPAs that currently
have some level of functional internet-based self-service tool that
would meet some (or all) of the requirements of the final rules, the
Departments recognize that these entities may incur lower burdens and
costs overall, as the Departments are of the view that these entities
may require an overall lower level of effort and capital expenditure to
meet the requirements of the final rules. Thus, the Departments have
estimated a low-end burden and cost to comply with the final rules.
Assuming that over 90 percent of issuers and TPAs currently provide an
internet-based self-service tool and will only be required to make
changes to their current system in order to meet the requirements in
the final rules, the Departments estimate that 175 issuers and 21 TPAs
will be required to develop an internet-based self-service tool from
start-up to operational functionality. The Departments also estimate
that each of those 196 entities will incur a first-year one-time cost
and burden of approximately 37,440 hours, with an
[[Page 72278]]
equivalent cost of approximately $5,295,680 (as discussed previously in
this ICR). For those 196 entities, the total first year one-time burden
is estimated to be 7,334,496 hours with an equivalent total cost of
approximately $1,037,423,712.
---------------------------------------------------------------------------
\286\ See AHIP release dated August 2, 2019. ``AHIP Issues
Statement on Proposed Rule Requiring Disclosure of Negotiated
Prices.'' America's Health Insurance Providers. August 2, 2019.
Available at: https://www.ahip.org/ahip-issues-statement-on-proposed-rule-requiring-disclosure-of-negotiated-prices/; see also
Higgins, A., Brainard, N., and Veselovskiy, G. ``Characterizing
Health Plan Price Estimator Tools: Findings from a National
Survey.'' 22 Am. J. Managed Care 126. 2016. Available at: https://ajmc.s3.amazonaws.com/_media/_pdf/AJMC_02_2016_Higgins%20(final).pdf.
Table 5A--Low-Range First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for Issuers
and TPAs Requiring a Complete Build
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
196 196 37,440 7,334,496 $1,037,423,712.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate that those issuers and TPAs that will only
be required to make changes to their existing systems will already have
operational capabilities that meet approximately 70 percent of the
requirements in the final rules and will only incur costs and burdens
related to changes needed to fully meet the requirements of the final
rules. Based on this assumption, the Departments estimate that 1,579
issuers and 184 TPAs will incur a first-year one-time hour burden of
11,232 hours, with an associated cost of $1,588,704.00 to fully satisfy
the initial requirements of the final rules. For all 1,763 issuers and
TPAs, the Departments estimates the total first year one-time burden
will be 19,803,139 hours, with an equivalent total cost of
approximately $2,801,044,022.40. The Departments recognize that issuers
and TPAs may currently have some form of internet-based self-service
tool that may provide greater functionality that could meet a greater
proportion of the requirements in the final rules. In those cases,
issuers and TPAs could see lower costs and burdens. The Departments
also recognize that there are likely a number of issuers and TPAs that
currently provide some form of internet-based self-service tool that
would require more development to meet the requirements of the final
rules. In those instances, those issuers and TPAs could incur greater
costs and burdens. The Departments' estimates are higher-bound
estimates that do not consider potential cost savings that could be
realized should issuers and TPAs buy or lease an internet-based self-
service tool from a third-party vendor or other issuer. However, the
Departments are of the view that issuers or TPAs that choose to buy or
rent an internet-based self-service tool from another entity could
incur significantly less costs and burdens.
Table 5B--Low-End First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for Issuers and
TPAs Requiring Only a Partial Build
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,763 1,763 11,232 19,803,139 $2,801,044,022.40
----------------------------------------------------------------------------------------------------------------
Table 5C--Total Low-End First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for all
Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 13,853 27,137,635 $3,838,467,734.40
----------------------------------------------------------------------------------------------------------------
In addition to the range of one-time costs and burdens estimated in
Tables 4B, 5B, 5C, 6A, and 6B, issuers and TPAs will incur annual costs
such as those related to ensuring cost estimation accuracy, providing
quality assurance, conducting website maintenance and making updates,
and enhancing or updating any needed security measures. The Departments
estimate that for each issuer and TPA, it will take a Project Manager/
Team Lead 1,040 hours (at $153 per hour), a Scrum Master 1,300 hours
(at $105 per hour), an Application Developer, Senior 1,560 hours (at
$143 per hour), a Business Analyst (at $120.00 per hour) 520 hours, a
Designer (at $116.00 per hour) 1,040 hours, a DevOps Engineer (at
$181.00 per hour) 520 hours, a Web Database/Application Developer IV
(at $152.00 per hour) 1,560 hours, and a UX Researcher/Service Designer
520 hours (at $154 per hour) to perform these tasks. The total annual
burden for each issuer or TPA will be 8,060 hours, with an equivalent
cost of approximately $1,113,060. For all 1,959 issuers and TPAs, the
total annual maintenance burden is estimated to be 15,789,540 hours,
with an equivalent associated total cost of approximately
$2,180,484,540.00. The Departments recognize that issuers and TPAs will
likely have varying levels of IT capabilities and experience in
maintaining and internet-based tool and could incur higher or lower
costs and burdens depending on those capabilities. The Departments
expect maintenance costs to decline in succeeding years as issuers and
TPAs gain efficiencies and experience in updating and managing their
internet-based self-service tool.
[[Page 72279]]
Table 6A--Estimated Year Two Implementation Cost and Hour Burden for Internet-Based Self-Service Tool for Each
Issuer or TPA
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 3,120 $153.00 $477.360.00
Scrum Master................................................. 3,120 105.00 327,600.00
Technical Architect/Sr. Developer............................ 3,120 149.00 464,880.00
Application Developer, Senior................................ 4,160 143.00 594,880.00
Business Analyst............................................. 2,080 120.00 249,600.00
UX Researcher/Service Designer............................... 2,080 154.00 320,320.00
Designer..................................................... 1,560 116.00 180,960.00
DevOps Engineer.............................................. 2,080 181.00 376,480.00
Web Database/Application Developer IV........................ 3,120 152.00
--------------------------------------------------
Total per Respondent..................................... 24,440 ............... 3,446,320.00
----------------------------------------------------------------------------------------------------------------
Table 6B--Estimated Year Two Implemenation Cost and Hour Burden for Internet-Based Self-Service Tool for All
Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 24,440.0 47,877,960 $6,611,791,830.97
----------------------------------------------------------------------------------------------------------------
In addition to the range of one-time costs and burdens estimated in
Tables 4B, 5B, 5C, 6A, and 6B, issuers and TPAs will incur annual costs
such as those related to ensuring cost estimation accuracy, providing
quality assurance, conducting website maintenance and making updates,
and enhancing or updating any needed security measures. The Departments
estimate that for each issuer and TPA, it will take a Project Manager/
Team Lead 1,040 hours (at $153 per hour), a Scrum Master 1,300 hours
(at $105 per hour), an Application Developer, Senior 1,560 hours (at
$143 per hour), a Business Analyst (at $120.00 per hour) 520 hours, a
Designer (at $116.00 per hour) 1,040 hours, a DevOps Engineer (at
$181.00 per hour) 520 hours, a Web Database/Application Developer IV
(at $152.00 per hour) 1,560 hours, and a UX Researcher/Service Designer
520 hours (at $154 per hour) to perform these tasks. The total annual
burden for each issuer or TPA will be 8,060 hours, with an equivalent
cost of approximately $1,113,060. For all 1,959 issuers and TPAs, the
total annual maintenance burden is estimated to be 15,789,540 hours,
with an equivalent associated total cost of approximately
$2,180,484,540.00. The Departments recognize that issuers and TPAs will
likely have varying levels of IT capabilities and experience in
maintaining and internet-based tool and could incur higher or lower
costs and burdens depending on those capabilities. The Departments
expect maintenance costs to decline in succeeding years as issuers and
TPAs gain efficiencies and experience in updating and managing their
internet-based self-service tool.
Table 7A--Estimated Annual Cost and Hour Burden for Maintenance of Internet-Based Self-Service Tool for Each
Issuer or TPA
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 1,040 $153.00 $159,120.00
Scrum Master................................................. 1,300 105.00 136,500.00
Application Developer, Senior................................ 1,560 143.00 223,080.00
Business Analyst............................................. 520 120.00 62,400.00
Designer..................................................... 1,040 116.00 120,640.00
DevOps Engineer.............................................. 520 181.00 94,120.00
Web Database/Application Developer IV........................ 1,560 152.00 237,120.00
UX Researcher/Service Designer............................... 520 154.00 80,080.00
--------------------------------------------------
Total per Respondent..................................... 8,060 ............... 1,113,060.00
----------------------------------------------------------------------------------------------------------------
Table 7B--Estimated Annual Cost and Hour Burden for Maintenance of Internet-Based Self-Service Tool for All
Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 8,060.0 15,789,540 $2,180,484,540.00
----------------------------------------------------------------------------------------------------------------
[[Page 72280]]
As noted previously in this ICR section, commenters stated that the
Departments grossly underestimated the cost burden of implementation on
plans and issuers. Additionally, commenters stated that the Departments
had underestimated the maintenance costs associated with the internet-
based self-service tool. Issuers estimated the annual maintenance costs
to be on average, about $3.78 million per issuer or TPA (ranging from
$375,000 to $10,000,000). As noted previously in this ICR section,
based on comments received, the Departments have adjusted the costs and
burden estimates to better reflect and align with the values submitted
by commenters. The Departments estimate the high-end three-year average
total hour burden, for all issuers and TPAs to develop, build, and
maintain an internet-based self-service tool will be 45,670,820 hours
annually, with an average annual total equivalent cost of
$6,388,837,830.
The Departments acknowledge that the costs described earlier in
this section may vary depending on the number of covered lives and the
number of providers and items and services incorporated into the
internet-based self-service tool. Recognizing that many issuers and
TPAs currently have some form of internet-based self-service tool in
operation that meets some aspects of the requirements of the final
rules, the Departments estimate the low-end average three-year annual
total burden, for all issuers and TPAs to develop, build, and maintain
an internet-based self-service tool will be 30,268,378 hours annually,
with an average annual total equivalent cost of $4,210,248,035. The
Departments recognize that plans, issuers, and TPAs may be able to
license existing internet-based self-service tools offered by vendors,
obviating the need to establish, upgrade, and maintain their own
internet-based self-service tools, and that vendor licensing fees,
dependent upon complexity, volume, and frequency of use, could be lower
than the burden and costs estimated here.
Table 8--Estimated High-End Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Internet-Based Self-
Service Tool
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
number of health Burden per Total annual Total estimated
Year insurance Responses respondent burden (hours) labor cost
issuers and TPAs (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022....................................................... 1,959 1,959 37,440.0 73,344,960 $10,374,237,120
2023....................................................... 1,959 1,959 24,440.0 47,877,960 6,611,791,830.97
2024....................................................... 1,959 1,959 8,060.0 15,789,540 2,180,484,540.00
3 year Average............................................. 1,959 1,959 23,313 45,670,820 6,388,837,830.32
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 9--Estimated Low-End Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs to Develop and Maintain the Internet-Based Self-
Service Tool
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
number of health Burden per Total annual Total estimated
Year insurance Responses respondent burden (hours) labor cost
issuers and TPAs (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022....................................................... 1,959 1,959 13,853 27,137,635 $3,838,467,734.40
2023....................................................... 1,959 1,959 24,440 47,877,960 6,611,791,830.97
2024....................................................... 1,959 1,959 8,060 15,789,540 2,180,484,540.00
3 year Average............................................. 1,959 1,959 15,451 30,268,378 4,210,248,035.12
--------------------------------------------------------------------------------------------------------------------------------------------------------
In addition to the one-time and annual maintenance costs estimated
in Table 8 and Table 9, issuers and TPAs will also incur an annual
burden and costs associated with customer service representative
training, consumer assistance and education, and administrative and
distribution costs related to the disclosures required in the final
rules. The Departments estimate that, to understand and navigate the
internet-based self-service tool and provide the appropriate assistance
to consumers, each customer service representative will require
approximately two hours (at $40 per hour) of annual consumer assistance
training at an associated cost of $80 per hour. The Departments
estimate that each issuer and TPA will train, on average, 10 customer
service representatives annually, resulting in a total annual burden of
20 hours, with an associated total cost of $800. For all 1,959 issuers
and TPAs, the total annual burden is estimated to be 39,180 hours, with
an equivalent total annual cost of approximately $1,567,200. The
Departments recognize that some issuers or TPAs may require varying
levels of training to acquaint their customer service representatives
with the functionalities of their internet-based self-service tool
depending on the degree of changes required to comply with the final
rules, in which case some issuers could incur higher costs and burdens
to appropriately train personnel.
Table 10A--Estimated Annual Cost and Hour Burden per Issuer or TPA To Train Customer Service Representatives To
Provide Assistance to Consumers Related to the Internet-Based Self-Service Tool
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Customer Service Representatives............................. 2 $40.00 $80.00
--------------------------------------------------
Total per Respondent..................................... 2 ............... 80.00
----------------------------------------------------------------------------------------------------------------
[[Page 72281]]
Table 10B--Estimated Annual Cost and Hour Burden for All Issuers and TPAs To Train Customer Service
Representatives To Provide Assistance to Consumers Related to the Internet-Based Self-Service Tool
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 20 39,180 $1,567,200.00
----------------------------------------------------------------------------------------------------------------
The Departments assume that the greatest proportion of
beneficiaries, participants, or enrollees that will request disclosure
of cost-sharing information in paper form will do so because they do
not have access to the internet. However, the Departments acknowledge
that some consumers with access to the internet will contact a plan or
issuer for assistance with using the internet-based self-service tool
and may request to receive cost-sharing information in paper form.
Recent studies have found that approximately 20 million households
do not have an internet subscription.\287\ Further, approximately 19
million Americans (6 percent of the population) lack access to fixed
broadband services that meet threshold levels.\288\ Additionally, a
recent Pew Research Center analysis found that 10 percent of U.S.
adults do not use the internet, citing the following major factors:
difficulty of use, age, cost of internet services, and lack of computer
ownership.\289\ Additional research indicates that an increasing
number, 17 percent, of individuals and households are now considered
``smartphone only'' and that 37 percent of U.S. adults mostly use
smartphones to access the internet and that many adults are forgoing
the use of traditional broadband services.\290\ Further research
indicates that younger individuals and households, including
approximately 93 percent of households with householders aged 15 to 34,
are more likely to have smartphones compared to those aged over
65.\291\ The Departments are of the view that the population most
likely to use the internet-based self-service tool would generally
consist of younger individuals, who are more comfortable using
technology and are more likely to have internet access via broadband or
smartphone technologies.
---------------------------------------------------------------------------
\287\ ``2017 American Community Survey Single-Year Estimates.''
United States Census Bureau. September 13, 2018. Available at:
https://www.census.gov/newsroom/press-kits/2018/acs-1year.html.
\288\ ``Eight Broadband Progress Report.'' United States Federal
Communications Commission. December 14, 2018. Available at: https://www.fcc.gov/reports-research/reports/broadband-progress-reports/eighth-broadband-progress-report. In addition to the estimated 19
million Americans that lack access, they further estimate that ``in
areas where broadband is available, approximately 100 million
Americans still do not subscribe.''
\289\ Anderson, M. et al. ``10% of Americans don't use the
internet. Who are they?'' Pew Research Center. April 22, 2019.
Available at: https://www.pewresearch.org/fact-tank/2019/04/22/some-americans-dont-use-the-internet-who-are-they/.
\290\ Anderson, M. ``Mobile Technology and Home Broadband
2019.'' Pew Research Center. June 13, 2019. Available at: https://www.pewinternet.org/2019/06/13/mobile-technology-and-home-broadband-2019/ (finding that overall 17 percent of Americans are now
``smartphone only'' internet users, up from 8 percent in 2013. They
study also shows that 45 percent of non-broadband users cite their
smartphones as a reason for not subscribing to high-speed internet).
\291\ Ryan, C. ``Computer and internet Use in the United States:
2016.'' American Community Survey Reports: United States Census
Bureau. August 2018. Available at: https://www.census.gov/content/dam/Census/library/publications/2018/acs/ACS-39.pdf.
---------------------------------------------------------------------------
The Departments note that there are 212.3 million beneficiaries,
participants, or enrollees enrolled in group health plans or with
health insurance issuers required to comply with the requirements of
the final rules for at least part of the year.\292\ On average, it is
estimated that each issuer or TPA would annually administer the
benefits for 108,379 beneficiaries, participants, or enrollees.
---------------------------------------------------------------------------
\292\ Id. at 283.
---------------------------------------------------------------------------
A recent study noted that only one to 12 percent of consumers that
have been offered internet-based or mobile application-based price
transparency tools use them.\293\ Taking that into account, and
assuming that six percent of covered individuals lack access to fixed
broadband services, the Departments estimate that on average six
percent of participants, beneficiaries, or enrollees will seek customer
support (a mid-range percentage of individuals that currently use
available cost estimator tools) and that an estimated one percent of
those participants, beneficiaries, or enrollees will request any
pertinent information be disclosed to them in in a non-internet
manner--resulting in an estimated 0.06 percent of participants,
beneficiaries, or enrollees requesting information. As discussed in
section V.D.1 of this preamble, the Departments have adjusted the
estimates related to customer service and mailed requests in order to
account for more recent data related to the number of participants,
beneficiaries, and enrollees. The Departments estimate that each issuer
or TPA, on average, will require a customer service representative to
interact with a beneficiary, participant, or enrollee approximately 65
times per year on matters related to cost-sharing information
disclosures required by the final rules. The Departments estimate that
each customer service representative will spend, on average, 15 minutes
(at $40 per hour) for each interaction, resulting in a cost of
approximately $10 per interaction. The Departments estimate that each
issuer or TPA will incur an annual burden of 16 hours, with an
associated equivalent cost of approximately $650; resulting in a total
annual burden of 31,847 hours, with an associated cost of approximately
$1,273,884 for all issuers and TPAs.
---------------------------------------------------------------------------
\293\ Mehrotra, A., Chernew, M., and Sinaiko, A. ``Health Policy
Report: Promises and Reality of Price Transparency.'' April 5, 2018.
14 N. Eng. J. Med. 378. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
---------------------------------------------------------------------------
The Departments assume that all beneficiaries, participants, or
enrollees that contact a customer service representative will request
non-internet disclosure of the internet-based self-service tool
information. Of these, the Departments estimate that 54 percent of the
requested information would be transmitted via email or facsimile at
negligible cost to the issuer or TPA and that 46 percent will request
the information be provided by mail. The Departments estimate that, on
average, each issuer or TPA will send approximately 30 disclosures by
mail annually. Based on these assumptions, the Departments estimate
that the total number of annual disclosures sent by mail for all
issuers and TPAs will be 58,599. The Departments recognize that the
numbers of per issuer and TPA mailings may represent a low-end estimate
and the number of requests may vary amongst each issuer or TPA
depending on the demographics of their beneficiaries, participants, or
enrollees. The Departments are of the view that although more
individuals will contact customer support for cost information the vast
majority of those individuals will likely obtain this information over
the phone or have it emailed rather than have it mailed to them.
The Departments assume, on average, the length of the printed
disclosure will be approximately nine single-sided pages in length,
assuming two pages of
[[Page 72282]]
information (similar to that provided in an EOB) for three providers
(for a total of six pages) and an additional three pages related to the
required notice statements, with a printing cost of $0.05 per page.
Therefore, including postage costs of $0.55 per mailing, the
Departments estimate that each issuer or TPA will incur a material and
printing costs of approximately $1.00 ($0.45 printing plus $0.55
postage costs) per mailed request. Based on these assumptions, the
Departments estimate that each issuer or TPA will incur an annual
printing and mailing cost of approximately $30, resulting in a total
annual printing and mailing cost of approximately $58,599 for all
issuers and TPAs.
Table 11A--Estimated Annual Cost and Hour Burden per Response per Issuer or TPA To Accept and Fulfill Requests
for a Mailed Disclosures
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Customer Service Representatives............................. 0.25 $40.00 $10
--------------------------------------------------
Total per Respondent......................................... 0.25 ............... 10
----------------------------------------------------------------------------------------------------------------
Table 11B--Estimated Annual Cost and Hour Burden for All Issuers and TPAs To Accept and Fulfill Requests for Mailed Disclosures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of Burden hours per Total labor cost of Printing and
respondents responses respondent Total burden hours reporting materials cost Total cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,959 1132,509 16 31,847 $1,273,884.00 $58,598.66 $1,332,482.66
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Departments solicited comment on the overall estimated costs
and burdens related to this collection of information request. The
Departments also sought comment on the technical and labor requirements
or costs that may be required to meet the requirements of the proposed
rules: For example, what costs may be associated with any potential
consolidation of information needed for the internet-based self-service
tool functionality. The Departments sought comment on the estimated
number of issuers and TPAs currently in the group and individual
markets and the number of self-insured group health plans that might
seek to independently develop an internet-based self-service tool, the
percentage of consumers who might use the internet-based self-service
tool, and the percentage of consumers who might contact their plan,
issuer, or TPA requesting information via a non-internet disclosure
method. The Departments sought comment on any other existing
efficiencies that could be leveraged to minimize the burden on plans,
issuers, and TPAs, as well as how many or what percentage of plans,
issuers, and TPAs might leverage such efficiencies. The Departments
sought comment on the proposed model notice and any additional
information that stakeholders thought should be included, removed, or
expanded upon and its overall adaptability.
All comments received with regard the topics above have been noted
and addressed in their corresponding ICR sections.
In conjunction with the final rules, CMS is seeking approval for
this information collection (OMB control number: 0938-1372
(Transparency in Coverage (CMS-10715)). CMS is requiring the following
information collections to include the following burden. DOL and the
Department of the Treasury will submit their burden estimates upon
approval.
2. ICRs Regarding Requirements for Public Disclosure of In-network
Rates, Historical Allowed Amount Data for Covered Items and Services
from Out-of-Network Providers and Prescription Drug Pricing Information
under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR
147.212.
The Departments are adding 26 CFR 54.9815-2715A3(b), 29 CFR
2590.715-2715A3(b), and 45 CFR 147.212(b) to the final rules requiring
group health plans and health insurance issuers to make public in-
network rates for covered items and services, out-of-network allowed
amounts for covered items or services, and negotiated rates and
historical net prices for each prescription drug NDC through three
machine-readable files that must conform to guidance issued by the
Departments. The list of required data elements that must be included
for each file for each covered item or service are discussed in section
II.C previously in this preamble and enumerated under paragraph
(b)(1)(i) for the In-network Rate File, paragraph (b)(1)(ii) for the
Allowed Amount File, and paragraph (b)(1)(iii) for the Prescription
Drug File of the final rules. Under paragraphs (b)(2) and (3) of the
final rules, the machine-readable files must be posted on a public
internet site accessible to any person free of charge and without
conditions and must be updated monthly.
For the In-network Rate File, the final rules require the
negotiated rates, underlying fee schedules, or derived amounts under a
plan or coverage regarding each covered item or service be furnished
for in-network providers. As discussed in section II.C earlier in this
preamble, the Departments expect plans and issuers to make public the
negotiated rate, fee schedule, or derived amount that is used to
adjudicate claims for the purpose of reconciling a provider's payment
to determine a participant's, beneficiary's, or enrollee's cost-sharing
liability. As discussed in the previous ICR section, the Departments
assume fully-insured group health plans will rely on issuers and most
self-insured group health plans will rely on issuers or TPAs to develop
and update the machine-readable files. The Departments recognize that
there may be some self-insured plans that wish to individually comply
with the final rules and will thus incur a similar burden and cost as
described in the following paragraphs.
Many commenters stated the costs associated with the technical
build and maintenance of the machine-readable files will be
significant, and many commenters strongly suggested that the costs and
burden of implementing the files would be significantly higher than
those estimated in the proposed rules. Some commenters stated that the
final rules would unreasonably burden
[[Page 72283]]
issuers with administrative costs and could be especially burdensome
for small issuers and self-insured plans. One commenter noted that a
significant amount of burden would be placed on out-of-network
providers to provide information regarding costs to plans and issuers.
Another commenter, a hospital association, stated that the proposed
rules would be an administrative burden for hospitals as they would
require a massive investment by hospitals to provide data to comply and
that these resources would be diverted from patient care support.
The Departments recognize that the requirements in the final rules
could result in instances where small issuers and self-insured plans
face a disproportionate burden due to their size; however, as noted
earlier in this preamble, the Departments expect that small issuers,
plans, and TPAs will combine their efforts and seek to take advantage
of any resulting economies of scale.
An independent study by Bates White Economic Consulting (Bates
White), commissioned by one commenter, developed an assessment of the
costs of the proposed rules by interviewing a mix of 18 large and small
health insurance issuers covering about 78 million lives; Bates White
assessed the average issuer cost to implement the In-network Rate File
as $2,139,167 with a range from $85,000 to $10,000,000. Bates White
reported that commercial issuers estimated an average cost of $2.1
million per issuer to develop and implement the In-network Rates File.
Per the study, issuers view the In-network Rate File as about 20 times
costlier to implement than the Departments' proposed estimate. In
addition, Bates White assessed the average annual issuer cost to
maintain the In-network Rate Files would be $467,000 with a range from
$15,000 to $1,000,000. Another commenter noted that commercial issuers
estimated annual costs of $600,000 per issuer to maintain the In-
network Rate File. Issuers viewed the In-network Rate File as about 13
times costlier to maintain than the Departments' proposed estimate.
In another attempt to quantify this burden, one commenter
emphasized that the potential universe of prices that would need to be
disclosed on the files is enormous and could be in the hundreds of
billions (more than 94,000 codes multiplied by the number of unique
practitioners, which in the large issuer's system alone could exceed 2
million).
One commenter noted that the effort to comply would involve an
immense amount of data aggregation, de-identification, and application
development work, and these tasks would be especially difficult for
small issuers and self-insured plans who are more likely to rely on
``rented'' networks. The commenter stated that to comply with the final
rules, issuers would need a team with data expertise and knowledge of
plan design and medical service billing to aggregate data, build re-
pricing engines, and assure accuracy.
Due to the belief that the burden estimate in the proposed rules
and related PRA grossly underestimated the burden of implementation on
plans and issuers, one commenter suggested the Departments should
retract the PRA and work with stakeholders to develop a less burdensome
transparency solution. Other commenters stated the burden estimates
included in the proposed rules violate the spirit and express provision
of the PRA.
The Departments recognize the concerns and issues noted by
commenters. As noted in section VI.A in this preamble, the Departments
have reviewed comments related to the costs and burdens associated with
the requirements of the final rules and devised updated estimates using
CALC derived wage rates. The Departments note that the conclusions of
the Bates White study referenced earlier in this preamble were based on
interviews with issuers in which issuers described the steps they
viewed as necessary to establish the required internet-based self-
service tool and the machine-readable files, and provided related costs
estimates associated with the estimated initial set-up of the internet-
based self-service tool and machine-readable files. These estimates,
however, did not provide the level of detail necessary for the
Departments to assess how those initial cost estimates differ from the
Departments' estimates.
The Bates White study also recognized the difficulty associated
with assessing issuer estimates reported from issuer study
participants. The study recognized that issuers interviewed varied
widely in size, had different levels of experience, and had engaged in
different levels of analysis of the impacts in the proposed rules. The
study further noted the differences in the extent to which issuers
evaluated the costs and feasibility of complying with the proposed
rules. The study also recognized that issuers interviewed made
different assumptions about the degree of support from vendors or trade
associations that may have affected issuers' perception of the
administrative and operational costs of implementation, and that
issuers did not provide details of the varied operational and
implementation costs and activities underlying their stated estimates
for complying with the proposed rules. Specifically, the study provided
no insight regarding the labor categories, wages, or hourly burdens
that were considered to produce these cost estimates. Accordingly, the
Bates White study did not provide details sufficient to allow those
estimates to be compared to the Departments' estimates in the proposed
rules.
Given the limited utility of information offered by the Bates White
study, the Departments took additional steps to ensure the
reasonableness and accuracy of the cost estimates associated with
compliance with the final rules. In developing the updated estimates,
the Departments took into account the potential aggregation of data and
the potential likelihood that the data required to meet the
requirements of the final rules would need to be obtained from multiple
sources. The Departments recognize that the size and complexity of the
machine-readable files will result in data files that are large.
However, the Departments do not anticipate that data storage would
impose a significant burden for issuers or TPAs due to the relatively
inexpensive costs associated with storage methods such as cloud
storage.
The Departments estimate a one-time first year burden and cost to
issuers and TPAs to make appropriate changes to IT systems and
processes, to develop, implement and operate the In-network Rate File
in order to meet the requirements of the final rules. The Departments
estimate that each health or TPA will require a Project Manager/Team
Lead 364 hours (at $153 per hour), a Scrum Master 1,404 hours (at $105
per hour), a Technical Architect/Sr. Developer 2,080 hours (at $149 per
hour), an Application Developer, Senior 1,716 hours (at $143 per hour),
a Business Analyst 1,404 hours (at $120 per hour), a Service Designer/
Researcher 520 hours (at $114 per hour) and a DevOps Engineer 260 hours
(at $181 per hour) to complete this task. The total one-time first year
burden for each issuer or TPA is estimated to be approximately 7,748
hours, with an equivalent associated cost of approximately $1,033,240.
For all 1,959 issuers and TPAs, the Departments estimate the total one-
time first year burden will be 15,178,332 hours with an associated cost
of approximately $2,024,117,160. The Departments emphasize that these
are upper bound estimates that are meant to be sufficient to cover
substantial, complex activities
[[Page 72284]]
that may be necessary for some plans, issuers, or TPAs to comply with
the final rules due to the manner in which their current systems are
designed. Such activities may include such significant activities as
the design and implementation of databases that will support the
production of the In-network Rate Files.
Table 12A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the In-Network Rate File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 364 $153.00 $55,692.00
Scrum Master................................................. 1,404 105.00 147,420.00
Technical Architect/Sr. Developer............................ 2,080 149.00 309,920.00
Application Developer, Senior................................ 1,716 143.00 245,388.00
Business Analyst............................................. 1,404 120.00 168,480.00
Service Designer/Researcher.................................. 520 114.00 59,280.00
DevOps Engineer.............................................. 260 181.00 47,060.00
--------------------------------------------------
Total per Respondent..................................... 7,748 ............... 1,033,240.00
----------------------------------------------------------------------------------------------------------------
Table 12B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the In-network Rate
File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 7,748 15,178,332 $2,024,117,160.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one costs estimated in Tables 12A
and 12B, issuers or TPAs will incur an additional year two burden and
cost to update the In-network Rate File monthly as required in the
final rules. The Departments estimate that for each month each issuer
or TPA it will require a Project Manager/Team Lead 22 hours (at $153
per hour), a Scrum Master 22 hours (at $105 per hour), a Technical
Architect/Sr. Developer 22 hours (at $149 per hour), an Application
Developer, Senior 22 hours (at $143 per hour), a Business Analyst 13
hours (at $120 per hour) and a DevOps Engineer 22 hours (at $181 per
hour) to make the required updates and needed adjustments to the In-
network Rate File. The Departments estimate that each issuer or TPA
will incur a monthly year two burden of 123 hours, with an associated
monthly cost of approximately $17,642 to adjust and update the In-
network Rate File. Each issuer or TPA will need to update the In-
network Rate File 12 times during a given year, resulting in a year two
burden of 1,476 hours, with an associated equivalent cost of
approximately $211,704. The Departments estimate the total year two
burden for all 1,959 issuers and TPAs will be 2,891,484 hours, with an
associated equivalent cost of approximately $414,728,136. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing update costs to decline in succeeding years as issuers
and TPAs gain efficiencies and experience in updating and managing the
In-network Rate File.
Table 13A--Estimated Monthly Year Two Cost and Hour Burden per Issuer or TPA for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 22 $153.00 $3,366.00
Scrum Master................................................. 22 105.00 2,310.00
Technical Architect/Sr. Developer............................ 22 149.00 3,278.00
Application Developer, Senior................................ 22 143.00 3,146.00
Business Analyst............................................. 13 120.00 1,560.00
DevOps Engineer.............................................. 22 181.00 3,982.00
--------------------------------------------------
Total per Respondent..................................... 123 ............... 17,642.00
----------------------------------------------------------------------------------------------------------------
Table 13B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 1,476 2,891,484 $414,728,136.00
----------------------------------------------------------------------------------------------------------------
[[Page 72285]]
In addition to the one-time year one and monthly year two costs
estimated Tables 12A, 12B, 13A, and 13B, in subsequent years, issuers
and TPAs will incur an ongoing monthly burden and cost to update and
maintain the In-network Rate File on a monthly basis as required by the
final rules. The Departments estimate that for each issuer or TPA it
will require a Project Manager/Team Lead 9 hours (at $153 per hour) and
an Application Developer, Senior 22 hours (at $143 per hour) to make
the required updates to the In-network Rate File. The Departments
estimate that each issuer or TPA will incur a monthly burden of 31
hours, with an associated cost of approximately $4,523 to update the
In-network Rate File. Each issuer or TPA will need to update the In-
network Rate File 12 times during a given year, resulting in an ongoing
annual hour burden of 372 hours, with an associated equivalent cost of
approximately $54,276. The Departments estimate the total annual burden
for all 1,959 issuers and TPAs will be 728,748 hours, with an
associated equivalent cost of approximately $106,326,684. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing update costs to decline in succeeding years as issuers
and TPAs gain efficiencies and experience in updating and managing the
In-network Rate File.
Table 14A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 9 $153.00 $1,377.00
Application Developer, Senior................................ 22 143.00 3,146.00
--------------------------------------------------
Total per Respondent..................................... 31 ............... 4,523.00
----------------------------------------------------------------------------------------------------------------
Table 14B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the In-Network Rate File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 372 728,748 $106,326,684.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate the total one-time year one burden for all
issuers and TPAs will be 15,178,332 hours, with an associated
equivalent cost of approximately $2,024,117,160 to develop and build
the In-network Rate File in a machine-readable format. In year two, the
Departments estimate the burden and costs to update and maintain the
In-network Rate file for all issuers and TPAs will be 2,891,484 hours,
with an associated equivalent cost of approximately $414,728,136. In
subsequent years, the Departments estimate the total annual burden to
maintain and update the In-network Rate File will be 728,748 hours,
with an annual associated equivalent cost of approximately
$106,326,684. The Departments estimate the three-year average annual
total burden, for all issuers and TPAs, will be 6,266,188 hours, with
an average annual associated equivalent total cost of $848,390,660.
Table 15--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the In-Network Rate File
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
number of health Burden per Total annual Total estimated
Year insurance Responses respondent burden (hours) labor cost
issuers and TPAs (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021....................................................... 1,959 1,959 7,748 15,178,332 $2,024,117,160.00
2022....................................................... 1,959 23,508 1,476 2,891,484 414,728,136.00
2023....................................................... 1,959 23,508 372 728,748 106,326,684.00
3 year Average............................................. 1,959 16,325 3,199 6,266,188 848,390,660.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
As mentioned in sections V.B in this preamble, the Departments
understand that plans and issuers may include gag clauses in their
provider contracting agreements, which prevent disclosure of in-network
rates. The Departments sought comment on whether such agreements would
need to be renegotiated to remove such clauses, and, if so, sought
comment regarding any costs and burden associated with this action.
One commenter stated the Departments have not sufficiently
accounted for costs associated with updating legal agreements (with
physicians, hospitals, drug manufacturers, and device manufacturers,
for example), updating and integrating data from multiple systems, and
establishing processes for making updates to files in the ordinary
course of business. Another commenter observed the Departments have not
adequately accounted for the time, resources, and cost burdens of
renegotiating contracts to remove gag clauses or confidentiality
clauses, which prevent disclosure of in-network rates. One commenter
provided examples of these costs: Printing and paper, mailing, attorney
drafting initial amendments and review of non-standard language
requests, costs for employees charged with negotiation and
administration, and costs paid to vendors.
[[Page 72286]]
Due to the potential complexities and time involved in contract
negotiations, the Departments recognize that should contracts require
renegotiation, all associated parties will face additional costs and
burdens. However, the Departments do not have insight into these
complexities or knowledge of how these contracts are structured, and
they are thus not able to quantify the costs and burdens associated
with these tasks. Also, as addressed earlier in this preamble, it is
not uncommon for new or modified regulatory requirements or new
statutory provisions to alter private contract arrangements. The
Departments note that the possibility of new or modified regulatory
requirements or new statutory provisions altering such contracts often
is contemplated in the contracts themselves; for example, drafters may
include contract language indicating that terms may be altered by
changes in law or regulation. Such language would obviate the need for
updates outsides of the regular contracting schedule and any associated
costs and burden.
For the Allowed Amount File, the final rules require plans and
issuers to make available a machine-readable file showing the unique
out-of-network allowed amounts and billed charges for covered items or
services furnished by out-of-network providers during the 90-day time
period that begins 180 days before the publication date of the file. As
discussed earlier in this preamble, to the extent that a group health
plan or health insurance issuer has paid multiple bills for an item or
service to a particular out-of-network provider at the same allowed
amount, the final rules will only require a plan or issuer to list the
allowed amount once. Additionally, if the plan or issuer would only
display allowed amounts in connection with 20 or fewer claims for a
covered item or service for payment to a provider during any relevant
90-day period, the plan or issuer will not be required to report those
unique allowed amounts.
As previously noted, an independent study by Bates White,
commissioned by one commenter, assessed the average issuer cost to
implement the Allowed Amount File as $1,071,167 with a range from
$42,000 to $5,000,000 and estimated the cost to implement the Allowed
Amount File as about 9 times costlier to implement than the
Departments' proposed estimate. This commenter also argued that the
average annual issuer cost to maintain the Allowed Amount File would be
$643,000 with a range from $12,000 to $1,500,000. Another commenter
argued that the cost to maintain the Allowed Amount File would be about
44 times costlier than the Departments' proposed estimate.
As noted above regarding the In-network Rate File cost and burdens,
the Departments have devised updated estimates for the Allowed Amounts
File using CALC derived wage rates. In developing the updated
estimates, the Departments took into account the potential aggregation
of data and the potential likelihood that the data required to meet the
requirements of the final rules would need to be obtained from multiple
sources.
The Departments estimate a one-time year one burden and cost to
issuers and TPAs to make appropriate changes to IT systems and
processes, to develop, implement, and operate the Allowed Amount File
in order to meet the requirements of the final rules. The Departments
estimate that each issuer or TPA will require a Scrum Master 520 hours
(at $105 per hour), a Technical Architect/Sr. Developer 780 hours (at
$149 per hour), an Application Developer, Senior 2,080 hours (at $143
per hour), a Business Analyst 520 hours (at $120 per hour), and a
DevOps Engineer 260 hours (at $181 per hour) to complete this task. The
Departments estimate the total one-time first year burden for each
issuer or TPA will be approximately 4,160 hours, with an equivalent
associated cost of approximately $577,720. For all 1,959 issuers and
TPAs, the Departments estimate the total one-time year one burden will
be 8,149,440 hours, with an equivalent associated cost of approximately
$1,131,753,480.
Table 16A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 520 $105.00 $54,600.00
Technical Architect/Sr. Developer............................ 780 149.00 116,220.00
Application Developer, Senior................................ 2,080 143.00 297,440.00
Business Analyst............................................. 520 120.00 62,400.00
DevOps Engineer.............................................. 260 181.00 47,060.00
--------------------------------------------------
Total per Respondent..................................... 4,160 ............... 577,720.00
----------------------------------------------------------------------------------------------------------------
Table 16B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 4,160 8,149,440 $1,131,753,480.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one costs estimated in Tables 16A
and 16B, issuers and TPAs will incur additional monthly burdens and
costs in year two to update the Allowed Amount File. The Departments
estimate that, in year two, each issuer or TPA will require a Scrum
Master 9 hours (at $105 per hour), an Application Developer, Senior 22
hours (at $143 per hour), and a DevOps Engineer 22 hour (at $181) to
make the required monthly Allowed Amount File updates. The Departments
estimate that each issuer or TPA will incur a monthly burden of 53
hours, with an equivalent associated cost of approximately $8,073 to
update the Allowed Amount File. The Departments estimate that each
issuer or TPA will need to update the Allowed Amount File 12 times
during a given year, resulting in a year two annual burden of
approximately 636 hours, with an equivalent associated cost of
[[Page 72287]]
approximately $96,876. The Departments estimate the total year two
burden for all 1,959 issuers and TPAs will be 1,245,924 hours, with an
equivalent associated cost of approximately $189,780,084. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing Allowed Amount File update costs to decline in
succeeding years as issuers and TPAs gain efficiencies and experience
in updating and managing the Allowed Amount File.
Table 17A--Estimated Year Two Monthly Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 9 $105.00 $945.00
Application Developer, Senior................................ 22 143.00 3,146.00
DevOps Engineer.............................................. 22 181.00 3,982.00
--------------------------------------------------
Total per Respondent..................................... 53 ............... 8,073.00
----------------------------------------------------------------------------------------------------------------
Table 17B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 636 1,245,924 $189,780,084.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one, monthly and total year two
costs estimated in Tables 16A, 16B, 17A and 17B, in subsequent years,
issuers and TPAs will incur additional ongoing monthly burdens and
costs to update the required Allowed Amount File. The Departments
estimate that for each issuer or TPA it will require a Scrum Master 4
hours (at $105 per hour), and an Application Developer, Senior 9 hours
(at $143 per hour) to make the required monthly Allowed Amount File
updates. The Departments estimate that each issuer or TPA will incur a
monthly burden of 13 hours, with an equivalent associated cost of
approximately $1,707 to update the Allowed Amount File. The Departments
estimate that each issuer or TPA will need to update the Allowed Amount
File 12 times during a given year, resulting in an ongoing annual
burden of approximately 156 hours, with an equivalent associated cost
of approximately $20,484. The Departments estimate the total burden for
all 1,959 issuers and TPAs will be 305,604 hours, with an equivalent
associated cost of approximately $40,128,156. The Departments consider
this estimate to be an upper-bound estimate and expect ongoing Allowed
Amount File update costs to decline in succeeding years as issuers and
TPAs gain efficiencies and experience in updating and managing the
Allowed Amount File.
Table 18A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 4 $105.00 $420.00
Application Developer, Senior................................ 9 143.00 1,287.00
--------------------------------------------------
Total per Respondent..................................... 13 ............... 1,707.00
----------------------------------------------------------------------------------------------------------------
Table 18B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 156 305,604 $40,128,156.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate the one-time year one burden for all
issuers and TPAs will be 8,149,440 hours, with an equivalent associated
cost of approximately $1,131,753,480 to develop and build the Allowed
Amount File to meet the requirements of the final rules. In year two,
the Departments estimate the total annual burden of 1,245,924 hours to
maintain and update the Allowed Amount File, with an equivalent
associated cost of approximately $189,780,084. In subsequent years, the
Departments estimate the total annual burden to maintain and update the
Allowed Amount File will be 305,604 hours, with an annual equivalent
associated cost of approximately $40,128,156. The Departments estimate
the three-year average annual total burden for all issuers and TPAs
will be 3,233,656 hours, with an average annual total
[[Page 72288]]
equivalent associated cost of approximately $453,887,240.
Table 19--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Allowed Amount File
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated number Burden per
Year of issuers and Responses respondent Total annual Total estimated
TPAs (hours) burden (hours) labor cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021....................................................... 1,959 1,959 4,160 8,149,440 $1,131,753,480.00
2022....................................................... 1,959 23,508 636 1,245,924 189,780,084.00
2023....................................................... 1,959 23,508 156 305,604 40,128,156.00
3 year Average............................................. 1,959 16,325 1,651 3,233,656 453,887,240.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Departments sought comment for this collection of information
request related to all aspects of the estimated burdens and costs.
Specifically, the Departments sought comments related to any technical
or operational difficulties associated with maintaining current and up-
to-date provider network information or any out-of-network allowed
amounts for covered items and services. The Departments also sought
comments related to the technical and labor requirements or costs that
may be required to meet the requirements in the final rules;
specifically, any factors that could minimize the frequency of updates
that issuers or TPAs would be required to make to the Allowed Amount
File.
The Departments also solicited comments for this collection of
information request related to all aspects of the estimated burdens and
costs. Specifically, the Departments sought comments related to any
technical or operational difficulties associated with collecting data
and maintaining any out-of-network allowed amounts for covered items
and services, including, any difficulties associated with the
adjudication of paid claims and incorporating covered items or services
furnished by a particular out-of-network provider during the 90-day
time period that begins 180 days prior to the publication date of the
Allowed Amount File. The Departments also sought comments related to
the technical and labor requirements or costs that may be required to
meet the requirements in the proposed rules: Specifically, any factors
that could minimize the burdens and costs associated with updates that
issuers or TPAs would be required to make to the Allowed Amount File.
As addressed in section II.C in this preamble, the use of a HIPAA-
compliant clearinghouse is permitted, but not required, in order to
make the required information public. Plans and issuers are permitted
to use HIPAA-compliant clearinghouses to meet the disclosure
requirements and the Departments anticipate they may do so if this
method is more efficient and cost-effective.
The Departments acknowledge that as many as 95 percent of group
health plans and health insurance issuers may already contract with
claims clearinghouses that currently collect some or all of the
information required to be disclosed under the final rules and might be
able to meet the requirements in the final rules easily, potentially
obviating the need for the plan, issuer, or TPA to invest in IT system
development. The Departments assume that these plans, issuers, and TPAs
will still incur burdens and costs, albeit reduced, related to
oversight and quality assurance regarding any associated clearinghouse
activities. The Departments sought comments on existing efficiencies,
such as the use of clearinghouses that could be leveraged by plans,
issuers, and TPAs related to the development and updating of the
required machine-readable files and how many issuers, TPAs, or self-
insured plans may already contract with clearinghouses that collect the
information required. Comments received are discussed earlier in the
Use of Third Parties to Satisfy Public Disclosure Requirements section
of this preamble.
For the Prescription Drug File, the Departments estimate one-time
first-year burdens and costs to issuers and TPAs to make appropriate
changes to IT systems and processes to develop, implement, and operate
the Prescription Drug File in order to meet the requirements in the
final rules. The Departments estimate that each issuer or TPA will
require a Project Manager/Team Lead 260 hours (at $153 per hour), a
Scrum Master 260 hours (at $105 per hour), an Application Developer,
Senior 520 hours (at $143 per hour), a Business Analyst 520 hours (at
$120 per hour), and a DevOps Engineer 260 hours (at $181 per hour) to
complete this task. The total one-time first year burden for each
issuer or TPA is estimated to be approximately 1,820 hours, with an
equivalent associated cost of approximately $250,900. For all 1,959
issuers and TPAs, the Departments estimate the total one-time first
year burden will be 3,565,380 hours, with an associated estimated cost
of approximately $491,513,100. The Departments emphasize that these are
upper bound estimates that are meant to be sufficient to cover
substantial, complex activities that may be necessary for some plans
and issuers to comply with the final rules due to the manner in which
their current systems are designed. Such activities may include such
significant activity as the design and implementation of databases that
will support the production of the Prescription Drug File.
Table 20A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 260 $153.00 $39,780.00
Scrum Master................................................. 260 105.00 27,300.00
Application Developer, Senior................................ 520 143.00 74,360.00
Business Analyst............................................. 520 120.00 62,400.00
[[Page 72289]]
DevOps Engineer.............................................. 260 181.00 47,060.00
--------------------------------------------------
Total per Respondent..................................... 1,820 ............... 250,900.00
----------------------------------------------------------------------------------------------------------------
Table 20B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug
File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 1,820 3,565,380 $491,513,100.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one costs estimated in Tables 20A
and 20B, issuers and TPAs will incur additional year two burdens and
costs to update the required Prescription Drug File monthly. The
Departments estimate that for each month, each issuer or TPA will
require a Project Manager/Team Lead 22 hours (at $153 per hour), an
Application Developer, Senior 22 hours (at $143 per hour), a Business
Analyst 9 hours (at $120 per hour) and a DevOps Engineer 22 hours (at
$181 per hour) to make the required updates and needed adjustments to
the Prescription Drug File. The Departments estimate that each issuer
or TPA will incur a monthly, year two, burden of 75 hours, with an
associated monthly cost of approximately $11,574 to update the
Prescription Drug File. Each issuer or TPA will need to update the
Prescription Drug File 12 times during a given year, resulting in a
year two burden of 900 hours, with an associated equivalent cost of
approximately $138,888. The Departments estimate the total year two
burden for all 1,959 issuers and TPAs will be 1,763,100 hours, with an
associated equivalent cost of approximately $272,081,592. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing update costs to decline in succeeding years as issuers
and TPAs gain efficiencies and experience in updating and managing the
Prescription Drug File.
Table 21A--Estimated Monthly Year Two Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 22 $153.00 $3,366.00
Application Developer, Senior................................ 22 143.00 3,146.00
Business Analyst............................................. 9 120.00 1,080.00
DevOps Engineer.............................................. 22 181.00 3,982.00
--------------------------------------------------
Total per Respondent..................................... 75 ............... 11,574.00
----------------------------------------------------------------------------------------------------------------
Table 21B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 900 1,763,100 $272,081,592.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one and monthly year two costs
estimated in Tables 20A, 20B, 21A and 21B, in subsequent years, issuers
and TPAs will incur ongoing monthly burdens and costs to update and
maintain the Prescription Drug File on a monthly basis. The Departments
estimate that each issuer or TPA will require a Scrum Master 9 hours
(at $153 per hour) and an Application Developer, Senior 22 hours (at
$143 per hour) to make the required updates to the Prescription Drug
File. The Departments estimate that each issuer or TPA will incur a
monthly burden of 31 hours, with an associated cost of approximately
$4,523, to update the Prescription Drug File. An issuer or TPA will
need to update the Prescription Drug File 12 times during a given year,
resulting in an ongoing annual burden of 372 hours, with an associated
equivalent cost of approximately $54,276. The Departments estimate the
total annual burden for all 1,959 issuers and TPAs will be 728,748
hours, with an associated equivalent cost of approximately
$106,326,680. The Departments consider this estimate to be an upper-
bound estimate and expect ongoing update costs to decline in succeeding
years as issuers and TPAs gain efficiencies and experience in updating
and managing Prescription Drug File.
[[Page 72290]]
Table 22A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 9 $153.00 $1,377.00
Application Developer, Senior................................ 22 143.00 3,146.00
--------------------------------------------------
Total per Respondent..................................... 31 ............... 4,523.00
----------------------------------------------------------------------------------------------------------------
Table 22B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 372 728,748 $106,326,684.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate the total one-time year one burden for all
issuers and TPAs will be 3,565,380 hours, with an associated equivalent
cost of approximately $491,513,100 to develop and build the
Prescription Drug File in a machine-readable format. In year two, the
Departments estimate the burden and costs to update and maintain the
Prescription Drug File, on a monthly basis, for all issuers and TPAs to
be 1,763,100 hours, with an associated equivalent cost of approximately
$272,081,592. In subsequent years, the Departments estimate the total
annual burden of 728,748 hours to maintain and update the Prescription
Drug File, with an annual associated equivalent cost of approximately
$106,326,684. The Departments estimate the three-year average annual
total burden, for all issuers and TPAs, will be 2,019,076 hours with an
average annual associated equivalent total cost of $289,973,792.
Table 23--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Prescription Drug File
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated number Burden per
Year of issuers and Responses respondent Total annual Total estimated labor
TPAs (hours) burden (hours) cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021................................................... 1,959 1,959 1,820 3,565,380 $491,513,100.00
2022................................................... 1,959 23,508 900 1,763,100 272,081,592.00
2023................................................... 1,959 23,508 372 728,748 106,326,684.00
3 year Average......................................... 1,959 16,325 1,031 2,019,076 289,973,792.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Due to comments received in response to the proposed rules, the
Departments have made changes to the final rules and the ICR sections
discussed above. The Departments seek comment regarding the changes
associated with these ICR sections. The Departments also seek comment
on the use of the CALC database, as discussed in section VI.A, to
determine occupational descriptions and hourly wage rates. The
Departments seek comment on the revised costs and burdens discussed in
section VI.A.1 as they relate to the required internet-based self-
service tool. The Departments also seek comment on model language
developed by the Departments, as discussed in section II.B.1.g of this
preamble, to meet the requirements of the final rule. The Departments
also seek comment on the revised costs and burdens, as discussed in
section VI.A.2, related to the requirements for the public disclosure
of In-network Rate, Allowed Amount, and Prescription Drug Files.
Additionally, the Departments seek comment on the data element changes
associated with those collection instruments. For the In-network Rate
File, the Departments seek comment regarding the data elements added to
the collection instrument; specifically, addition of data elements
including the TIN, Place of service code, derived amount, underlying
fee schedule rates, payment arrangement indicator, the use of base
negotiated rates (for certain reimbursement models), and other data
elements discussed in section C.1.c of this preamble. The Departments
also seek comment on the Allowed Amount File regarding the addition of
data elements including the TIN, NPI, and billed charges associated
with allowed amounts. The Departments seek comment on all data elements
discussed in section C.1.c of this preamble as they relate to the
Prescription Drug File, as well as the estimated costs and burdens
estimated above.
In association with amendments made to the final rules, CMS is
seeking OMB approval for the information collection requirements
associated with OMB control number 0938-1372 (CMS-10715--Transparency
in Coverage). Comments will be solicited through a 60-day Federal
Register notice, in accordance with Section 3506(c)(2)(A) of the
Paperwork Reduction Act. Data collection requirements associated with
the internet-based self-service tool, In-network Rate, Allowed Amount,
and Prescription Drug Files will not be effective until OMB approval is
sought. The Department of Labor and the Department of the Treasury will
submit their burden estimates upon approval.
2. ICRs Regarding Medical Loss Ratio (45 CFR 158.221)
HHS is finalizing its proposal to amend 45 CFR 158.221(b) to allow
health insurance issuers offering group or individual health insurance
coverage to include in the MLR numerator ``shared savings'' payments
made to
[[Page 72291]]
enrollees as a result of the enrollee choosing to obtain health care
from a lower-cost, higher-value provider. HHS does not anticipate that
implementing this provision will require significant changes to the MLR
Annual Reporting Form or will significantly change the associated
burden. The burden related to this collection is currently approved
under OMB Control Number 0938-1164 (Exp. 10/31/2020); Medical Loss
Ratio Annual Reports, MLR Notices, and Recordkeeping Requirements (CMS-
10418).
3. Summary of Annual Burden Estimates for Requirements
Table 24--Estimated Three Year Average Proposed Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total
OMB control Number of Number of Burden per annual Labor cost of Mailing
Regulation section(s) number respondents responses response burden reporting ($) cost ($) Total cost ($)
(hours) (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. Sec. 54.9815- 0938-1372* 1,959 1,959 23,313 45,670,820 $6,388,837,830.32 $0 $6,388,837,830.32
2715A2(b)(2)(i); 2590.715-
2715A2(b)(2)(i); and
147.211(b)(2)(i).
Sec. Sec. 54.9815- 0938-1372 1,306 84,926 11 21,231 849,256.00 39,065.78 888,321.78
2715A2(b)(2)(ii); 2590.715-
2715A2(b)(2)(ii); and
147.211(b)(2)(ii).
Sec. Sec. 54.9815- 0938-1372 1,959 16,325 3,199 6,266,188 848,390,660.00 0 848,390,660.00
2715A3(b)(i); 2590.715-
2715A3(b)(i); and
147.212(b)(1)(i).
Sec. Sec. 54.9815- 0938-1372 1,959 16,325 1,651 3,233,656 453,887,240.00 0 453,887,240.00
2715A3(b)(1)(ii); 2590.715-
2715A3(b)(1)(ii); and
147.212(b)(1)(ii).
Sec. Sec. 54.9815- 0938-1372 1,959 16,325 1,031 2,019,076 289,973,792.00 0 289,973,792.00
2715A3(b)(1)(iii); 2590.715-
2715A3(b)(1)(iii); and
147.212(b)(1)(iii).
Total...................... ................ ........... 135,860 29,204 57,210,971 7,981,938,778.32 39,065.78 7,981,977,844.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
* High-end three year estimated values are represented in the table and used to determine the overall estimated 3-year average.
For PRA purposes, the Departments are splitting the burden: CMS
will account for 50 percent of the associated costs and burdens and the
Departments of Labor and the Department of the Treasury will each
account for 25 percent of the associated costs and burdens. The burden
for CMS will be 28,605,486 hours, with an equivalent associated cost of
approximately $3,990,969,389 and a cost burden of $19,533. For the
Departments of Labor and the Treasury, each Department will account for
a burden of 14,302,743 hours with an equivalent associated cost of
approximately $1,995,484,695 and a cost burden of $9,766.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires
agencies to prepare a final regulatory flexibility analysis to describe
the impact of proposed rules on small entities, unless the head of the
agency can certify that the rule would not have a significant economic
impact on a substantial number of small entities. The RFA generally
defines a ``small entity'' as (1) a proprietary firm meeting the size
standards of the Small Business Administration (SBA), (2) a not-for-
profit organization that is not dominant in its field, or (3) a small
government jurisdiction with a population of less than 50,000. States
and individuals are not included in the definition of ``small entity.''
HHS uses a change in revenues of more than three to five percent as
its measure of significant economic impact on a substantial number of
small entities.
The final rules require that group health plans and health
insurance issuers disclose to a participant, beneficiary, or enrollee
such individual's cost-sharing information for covered items or
services from a particular provider or providers; to make public in-
network rates, including amounts in underlying fee schedules,
negotiated rates, and derived amounts for in-network providers;
historical allowed amounts paid to out-of-network providers and billed
charges for all covered items and services; and negotiated rates and
historical net prices for prescription drugs. The Departments are of
the view issuers generally exceed the size thresholds for ``small
entities'' established by the SBA, so the Departments are not of the
view that an initial regulatory flexibility analysis is required for
such firms. ERISA-covered plans are often small entities, however.
While the Departments are of the view that these plans would rely on
the larger issuers or TPAs to comply with the final rules, they would
still experience increased costs because the costs of complying with
these requirements will likely be passed on to them. However, as
discussed in more detail later in this section of this preamble, the
Departments are not of the view that the additional costs meet the
significant impact requirement. In addition, while the requirements of
the final rules do not apply to providers, providers may experience a
loss in revenue as a result of the demands of price sensitive consumers
and plans, and because smaller issuers may be unwilling to continue
paying higher rates than larger issuers for the same items and
services. The Departments are of the view that issuers would be
classified under the North American Industry Classification System code
524114 (Direct Health and Medical Insurance Carriers). According to SBA
size standards, entities with average annual receipts of $41.5 million
or less would be considered small entities under North American
Industry Classification System codes. Issuers could possibly be
classified under code 621491 (HMO Medical Centers) and, if this is the
case, the SBA size standard would be $35 million or less.\294\ The
Departments are of the view that few, if any, insurance companies
underwriting comprehensive health insurance policies (in contrast, for
example, to travel insurance policies or dental discount policies) fall
below these size thresholds. Based on data from MLR annual report
submissions for the 2017 MLR reporting year, approximately 90 out of
500 issuers of health insurance coverage nationwide had total premium
revenue of $41.5 million or less. \295\ This estimate likely overstates
the actual
[[Page 72292]]
number of small health insurance issuers that may be affected, since
over 72 percent of these small issuers belong to larger holding groups,
and most, if not all, of these small issuers are likely to have non-
health lines of business that will result in their revenues exceeding
$41.5 million. The Departments are of the view that these same
assumptions also apply to the TPAs that would be affected by the final
rules. The Departments do not expect any of these 90 potentially small
entities to experience a change in rebates under the amendments to the
MLR provisions of the final rules in 45 CFR part 158. The Departments
acknowledge that it may be likely that a number of small entities might
enter into contracts with other entities in order to meet the
requirements in the final rules, perhaps allowing for the development
of economies of scale. Due to the lack of knowledge regarding what
small entities may decide to do in order to meet these requirements and
any costs they might incur related to contracts, the Departments sought
comment on ways that the final rules will impose additional costs and
burdens on small entities and how many would be likely to engage in
contracts to meet the requirements.
---------------------------------------------------------------------------
\294\ ``Table of Small Business Size Standards Matched to North
American Industry Classification System Codes.'' United States Small
Business Administration. Available at: https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
\295\ ``Medical Loss Ratio Data and System Resources.'' CCIIO.
Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
---------------------------------------------------------------------------
The Departments received a number of comments related to the
potential additional costs, burdens, and other effects the final rules
could have on small entities. These comments have been noted and
addressed in the RIA and ICR sections titled Regarding Requirements for
Public Disclosure of In-network Rates, Historical Allowed Amount Data
for Covered Items and Services from Out-of-Network Providers and
Prescription Drug Pricing Information; Requirements for Disclosing
Cost-sharing information to Participant, Beneficiaries, or Enrollees;
and the Applicability Date section of this preamble.
For purposes of the RFA, the DOL continues to consider a small
entity to be an employee benefit plan with fewer than 100
participants.\296\ Furthermore, while some large employers may have
small plans, most small plans are maintained by small employers.
---------------------------------------------------------------------------
\296\ The basis for this definition is found in section
104(a)(2) of ERISA, which permits the Secretary of Labor to
prescribe simplified annual reports for pension plans that cover
fewer than 100 participants.
---------------------------------------------------------------------------
Thus, the Departments are of the view that assessing the impact of
the final rules on small plans is an appropriate substitute for
evaluating the effect on small entities. The definition of small entity
considered appropriate for this purpose differs, however, from a
definition of small business that is based on size standards
promulgated by the SBA (13 CFR 121.201) pursuant to the Small Business
Act (15 U.S.C. 631, et seq.). Therefore, EBSA requested comments on the
appropriateness of the size standard used in evaluating the impact of
the final rules on small entities. Using the DOL definition of small,
about 2,160,743 of the approximately 2,327,339 plans are small
entities. Using a threshold approach, if the total costs of the final
rules are spread evenly across all 1,754 issuers, 205 TPAs, and
2,327,339 ERISA health plans, without considering size, using the
three-year average costs, the per-entity costs could be $3,426.77
($7,981,977,844.10/2,329,298). If those costs are spread evenly across
the estimated 212.3 million beneficiaries, participants, or enrollees
\297\ enrolled in plans or issuers required to comply with the
requirements then the average cost per covered individual would be
$37.60 ($7,981,977,844.102/212.3 million). Neither the cost per entity
nor the cost per covered individual is a significant impact. Further,
the costs estimated in section VI in this preamble may be overstated as
it is assumed that all of issuers and TPAs will build the internet-
based self-service tool and the machine-readable files, compile the
appropriate data, and perform the required updates themselves rather
than using common third parties such as clearinghouses, as discussed in
section II.C in this preamble. If private health insurance transactions
are processed through clearinghouses, with at least the fields required
in the machine-readable files, there could be an unaccounted for source
of savings, as clearinghouses may already process much of the data that
issuers and TPAs would be required to collect under the final rules.
---------------------------------------------------------------------------
\297\ Id. at 272.
---------------------------------------------------------------------------
In addition, section 1102(b) of the SSA (42 U.S.C. 1302) requires
the Departments to prepare a regulatory impact analysis if a rule may
have a significant impact on the operations of a substantial number of
small rural hospitals. This analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the SSA, the
Departments define a small rural hospital as a hospital that is located
outside of a metropolitan statistical area and has fewer than 100 beds.
As noted and addressed in section II.B.2.C in this preamble,
commenters expressed concerns that exposure of in-network rates could
have various unintended consequences on the health care industry, group
health plans and health insurance issuers, and providers. Also as
discussed in the sections VI.A.2, one commenter stated that the
proposed rules would create administrative burdens for hospitals as
hospitals would be required to make massive investments to provide the
data required under the final rules. The Departments note that the
final rules do not explicitly apply to hospitals and do not agree that
hospitals will require massive investments to comply with the final
rules, as opposed to the potential costs they could incur in order to
comply with the Hospital Price Transparency final rule. Furthermore,
the Departments recognize that while the requirements of the final
rules do not apply to providers, including hospitals, some providers
may experience a loss in revenue as a result of the demands of price
sensitive consumers. The Departments also recognize that while the
requirements in the final rules may result in instances where small
rural hospitals face additional costs and burdens due to their size and
the market dynamics in their areas, the generally reduced competition
amongst rural hospitals, due to the overall lower number of hospitals
in these areas, will provide them more leverage when negotiating with
issuers. Nonetheless, some rural hospitals may see their costs increase
if the lack of competition results in these hospitals being unable to
negotiate more favorable terms with plans and issuers. This dynamic
could result in some small rural hospitals seeing their revenue
decrease as reimbursement rates decline and overall costs increase,
though rural hospitals could also see reduced costs and burdens if they
are able to successfully negotiate more favorable network contracts.
Due to a lack of information and overall knowledge, the Departments are
not able to confidently estimate the effects the final rules will have
on small rural hospitals; however, the Departments are of the view that
the final rules will not have a significant impact on the operations of
a substantial number of small rural hospitals.
Impact of Regulations on Small Business--Department of the Treasury
Pursuant to section 7805(f) of the Code, the proposed rules that
preceded the final rules were submitted to the Chief Counsel for
Advocacy of the SBA for comment on their impact on small businesses,
and no comments were received.
C. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
[[Page 72293]]
costs and benefits and take certain actions before issuing a final rule
that includes any Federal mandate that may result in expenditures in
any one year by a state, local, or tribal governments, in the
aggregate, or by the private sector, of $100 million in 1995 dollars,
updated annually for inflation. In 2020, that threshold is
approximately $156 million.
State, local, or tribal governments may incur costs to enforce some
of the requirements of the final rules. The final rules include
instructions for disclosures that would affect private sector firms
(for example, issuers offering health insurance coverage in the
individual and group markets, and TPAs providing administrative
services to group health plans). The Departments acknowledge that state
governments could incur costs associated with enforcement of sections
within the final rules and, although the Departments have not been able
to quantify all costs, the Departments expect the combined impact on
state, local, and tribal governments to be below the threshold. The
costs incurred by the private sector have been previously discussed in
Collection of Information Requirements sections.
One commenter contended that due to the requirement to make the
machine-readable files publicly available, issuers would also be
required to post files with complete negotiated payment amount
information, and that these files would be very complex, with thousands
of procedure codes and many different plans and networks offered by
issuers. The commenter further contended that due to the complexity and
size of the files significant state resources would be required to
review these files in order to ensure their accuracy, completeness, and
timeliness. They contended that without funding states will be
challenged in maintaining effective enforcement and urged the
Departments to consider providing grants to states to cover the cost of
enforcing any final rules.
The Departments recognize that due to size and complexity of the
machine-readable files required some states will incur increased
burdens and costs to review and ensure compliance with the requirements
in the final rules. However, at this time, the Departments do not have
available funding to provide grants to assist states in their efforts.
The Departments will take it under consideration and evaluate the
potential necessity to provide grants to assist states in their efforts
should a significant need arise. The Departments expect that a number
of states with the requisite authority to enforce the provisions of the
final rules may defer enforcement to Federal regulators because of lack
of funds.
D. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a final rule that imposes substantial
direct costs on state and local governments, preempts state law, or
otherwise has federalism implications. Federal agencies promulgating
regulations that have federalism implications must consult with state
and local officials and describe the extent of their consultation and
the nature of the concerns of state and local officials in this
preamble to the regulation.
In the Departments' view, the final rules may have federalism
implications, because they would have direct effects on the states, the
relationship between national governments and states, and on the
distribution of power and responsibilities among various levels of
government relating to the disclosure of health insurance coverage
information to the public.
Under the final rules, all group health plans and health insurance
issuers, including self-insured, non-Federal governmental group health
plans as defined in section 2791 of the PHS Act, will be required to
develop an internet-based self-service tool to disclose to a
participant, beneficiary, or enrollee, the consumer-specific estimated
cost-sharing liability for covered items or services from a particular
provider and also to provide this information by mail upon request. The
final rules also require plans and issuers to disclose provider in-
network rates, historical data on out-of-network allowed amounts, and
negotiated rates and historical net prices for prescription drugs
through digital files in a machine-readable format posted publicly on
an internet website. Such Federal standards developed under section
2715A of the PHS Act preempt any related state standards that require
pricing information to be disclosed to the participant, beneficiary, or
enrollee, or otherwise publicly disclosed, to the extent the state
disclosure requirements would provide less information to the consumer
or the public than what is required under the final rules.
The Departments are of the view that the final rules may have
federalism implications based on the required disclosure of pricing
information, as the Departments are aware of at least 28 states that
have passed some form of price-transparency legislation, such as all-
payer claims databases, consumer-facing price comparison tools, and the
right to shop programs.\298\ Under these state provisions, state
requirements vary broadly in terms of the level of disclosure
required.\299\ Some states list the price for each individual service,
whereas some states list the aggregate costs across providers and over
time to measure the price associated with an episode of illness. States
also differ in terms of the dissemination of the information. For
example, California mandates that uninsured patients receive estimated
prices upon request. In contrast, other states use websites or software
applications that allow consumers to compare prices across providers.
Only seven states have published the pricing information of issuers on
consumer-facing public websites.\300\ Therefore, the final rules may
require a higher level of disclosure by plans and issuers than some
state laws.
---------------------------------------------------------------------------
\298\ ``Transparency of Health Costs; State Actions.'' National
Conference of State Legislatures. March 2017. Available at: https://www.ncsl.org/research/health/transparency-and-disclosure-health-costs.aspx.
\299\ Mehrotra, A., Chernew, M., and Sinaiko, A. ``Promise and
Reality of Price Transparency.'' 14 N. Engl. J. Med. 378. April 5,
2018. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
\300\ Evans, M. ``One State's Effort to Publicize Hospital
Prices Brings Mixed Results.'' Wall Street Journal. June 26, 2019.
Available at: https://www.wsj.com/articles/one-states-effort-to-publicize-hospital-prices-brings-mixed-results-11561555562.
---------------------------------------------------------------------------
One commenter asked that the Departments clarify their intentions
regarding Federal preemption with respect to state laws that conflict
with the final rules. Congress passed PPACA to improve the health
insurance markets on a nationwide basis. King. v. Burwell, 135 S. Ct.
2480, 2496 (2015). Under section 1321(d) of PPACA and section 2724(a)
of the PHS Act, nothing in these regulations would preempt state law
unless such state law prevents the application of the applicable
Federal requirement. Based on this legal context, the Departments
intend the implementation of the rules to preempt state law to the
extent enforcement of state law would prevent the application of
PPACA.\301\ To the extent the final rules preempt state law, they do so
under well-settled law.
---------------------------------------------------------------------------
\301\ See section 1321(d) of PPACA (``Nothing in this title
shall be construed to preempt any State law that does not prevent
the application of the provisions of this title.)
---------------------------------------------------------------------------
In general, through section 514, ERISA supersedes state laws to the
extent that they relate to any covered employee benefit plan, and
preserves state laws that regulate insurance, banking, or securities.
Furthermore, the preemption provisions of section 731 of ERISA and
section 2724 of the PHS Act
[[Page 72294]]
(implemented in 29 CFR 2590.731(a) and 45 CFR 146.143(a)) apply so that
the HIPAA requirements (including those of PPACA) are not to be
``construed to supersede any provision of state law which establishes,
implements, or continues in effect any standard or requirement solely
relating to issuers in connection with group health insurance coverage
except to the extent that such standard or requirement prevents the
application of a `requirement' of a federal standard.'' The conference
report accompanying HIPAA indicates that this preemption is intended to
be the ``narrowest'' preemption of states laws (See House Conf. Rep.
No. 104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News
2018). States may therefore continue to apply state law requirements to
issuers except to the extent that such requirements prevent the
application of PPACA requirements that are the subject of this
rulemaking. Accordingly, states have significant latitude to impose
requirements on issuers that are more restrictive than the Federal law.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have federalism
implications or limit the policy making discretion of the states, the
Departments have engaged in efforts to consult with and work
cooperatively with affected states, including participating in
conference calls with and attending conferences of NAIC, and consulting
with state insurance officials on an individual basis. The Departments
intend to act in a similar fashion in enforcing PPACA, including the
provisions of section 2715A of the PHS Act. While developing the final
rules, the Departments attempted to balance the states' interests in
regulating issuers with Congress' intent to provide an improved level
of price transparency to the public in every state. By doing so, it is
the Departments' view that they have complied with the requirements of
Executive Order 13132.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signatures affixed to the final rules, the
Departments certify that the Department of the Treasury, Employee
Benefits Security Administration, and the CMS have complied with the
requirements of Executive Order 13132 for the final rules in a
meaningful and timely manner.
E. Congressional Review Act
The final rules are subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information.
Therefore, the final rules have been transmitted to the Congress and
the Comptroller General. Pursuant to the Congressional Review Act, the
Office of Information and Regulatory Affairs designated the final rules
as ``major rules'' as that term is defined in 5 U.S.C. 804(2), because
it is likely to result in an annual effect on the economy of $100
million or more. In accordance with the provisions of Executive Order
12866, this regulation was reviewed by the Office of Management and
Budget.
F. Reducing Regulation and Controlling Regulatory Costs
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of
Executive Order 13771 requires an agency, unless prohibited by law, to
identify at least two existing regulations to be repealed when the
agency publicly proposes for notice and comment, or otherwise issues, a
new regulation. In furtherance of this requirement, section 2(c) of
Executive Order 13771 requires that the new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
two prior regulations.
The final rules are considered an Executive Order 13771 regulatory
action. The Departments estimate that these rules will generate
$3,489.71 million in costs in 2021, $10,761.15 million in 2022, $6,569
million in 2023, and annual costs of approximately $2,330 million
thereafter. Discounted at 7 percent relative to year 2016, over a
perpetual time horizon the annualized value of these costs is $2,413.54
million. Details on the estimated costs of the final rules can be found
in the preceding analyses.
VII. Statutory Authority
The Department of the Treasury regulations are adopted pursuant to
the authority contained in sections 7805 and 9833 of the Code.
The Department of Labor regulations are adopted pursuant to the
authority contained in 29 U.S.C. 1135, 1185d, and 1191c; and Secretary
of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 2012).
The Department of Health and Human Services regulations are adopted
pursuant to the authority contained in sections 1311 of PPACA, 2701
through 2763, 2791, 2792, and 2794 of the PHS Act (42 U.S.C. 300gg
through 300gg-63, 300gg-91, 300gg-92, and 300gg-94), as amended.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health insurance, Pensions, Reporting
and recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Health insurance, Medical child support,
Reporting and recordkeeping requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements, State regulation of health insurance.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
Sunita Lough,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service.
Approved: October 28, 2020.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
Signed at Washington DC, this 30th day of October, 2020.
Jeanne Klinefelter Wilson,
Acting Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
Dated: October 8, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: October 20, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Amendments to the Regulations
For the reasons set forth in this preamble, the Department of the
Treasury amends 26 CFR part 54 as set forth below:
PART 54--PENSION EXCISE TAXES
0
Par. 1. The authority citation for part 54 is amended by adding an
entry for Sec. Sec. 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3
in numerical order to read in part as follows:
[[Page 72295]]
Authority: 26 U.S.C. 7805, unless otherwise noted.
* * * * *
Sections 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3 are
also issued under 26 U.S.C. 9833;
* * * * *
0
Par. 2. Sections 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3 are
added to read as follows:
Sec. 54.9815-2715A1 Transparency in coverage--definitions.
(a) Scope and definitions--(1) Scope. This section sets forth
definitions for the price transparency requirements for group health
plans and health insurance issuers offering group health insurance
coverage established in this section and Sec. Sec. 54.9815-2715A2 and
54.9815-2715A3.
(2) Definitions. For purposes of this section and Sec. Sec.
54.9815-2715A2 and 54.9815-2715A3, the following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial responsibility a participant or
beneficiary has incurred at the time a request for cost-sharing
information is made, with respect to a deductible or out-of-pocket
limit. If an individual is enrolled in other than self-only coverage,
these accumulated amounts shall include the financial responsibility a
participant or beneficiary has incurred toward meeting his or her
individual deductible or out-of-pocket limit, as well as the amount of
financial responsibility that all the individuals enrolled under the
plan or coverage have incurred, in aggregate, toward meeting the other
than self-only deductible or out-of-pocket limit, as applicable.
Accumulated amounts include any expense that counts toward a deductible
or out-of-pocket limit (such as a copayment or coinsurance), but
exclude any expense that does not count toward a deductible or out-of-
pocket limit (such as any premium payment, out-of-pocket expense for
out-of-network services, or amount for items or services not covered
under the group health plan or health insurance coverage); and
(B) To the extent a group health plan or health insurance issuer
imposes a cumulative treatment limitation on a particular covered item
or service (such as a limit on the number of items, days, units,
visits, or hours covered in a defined time period) independent of
individual medical necessity determinations, the amount that has
accrued toward the limit on the item or service (such as the number of
items, days, units, visits, or hours the participant or beneficiary,
has used within that time period).
(ii) Beneficiary has the meaning given the term under section 3(8)
of the Employee Retirement Income Security Act of 1974 (ERISA).
(iii) Billed charge means the total charges for an item or service
billed to a group health plan or health insurance issuer by a provider.
(iv) Billing code means the code used by a group health plan or
health insurance issuer or provider to identify health care items or
services for purposes of billing, adjudicating, and paying claims for a
covered item or service, including the Current Procedural Terminology
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code,
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other
common payer identifier.
(v) Bundled payment arrangement means a payment model under which a
provider is paid a single payment for all covered items and services
provided to a participant or beneficiary for a specific treatment or
procedure.
(vi) Copayment assistance means the financial assistance a
participant or beneficiary receives from a prescription drug or medical
supply manufacturer towards the purchase of a covered item or service.
(vii) Cost-sharing liability means the amount a participant or
beneficiary is responsible for paying for a covered item or service
under the terms of the group health plan or health insurance coverage.
Cost-sharing liability generally includes deductibles, coinsurance, and
copayments, but does not include premiums, balance billing amounts by
out-of-network providers, or the cost of items or services that are not
covered under a group health plan or health insurance coverage.
(viii) Cost-sharing information means information related to any
expenditure required by or on behalf of a participant or beneficiary
with respect to health care benefits that are relevant to a
determination of the participant's or beneficiary's cost-sharing
liability for a particular covered item or service.
(ix) Covered items or services means those items or services,
including prescription drugs, the costs for which are payable, in whole
or in part, under the terms of a group health plan or health insurance
coverage.
(x) Derived amount means the price that a group health plan or
health insurance issuer assigns to an item or service for the purpose
of internal accounting, reconciliation with providers, or submitting
data in accordance with the requirements of 45 CFR 153.710(c).
(xi) Historical net price means the retrospective average amount a
group health plan or health insurance issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. The allocation
shall be determined by dollar value for non-product specific and
product-specific rebates, discounts, chargebacks, fees, and other price
concessions to the extent that the total amount of any such price
concession is known to the group health plan or health insurance issuer
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec. 54.9815-2715A3. However, to the
extent that the total amount of any non-product specific and product-
specific rebates, discounts, chargebacks, fees, or other price
concessions is not known to the group health plan or health insurance
issuer at the time of file publication, then the plan or issuer shall
allocate such rebates, discounts, chargebacks, fees, and other price
concessions by using a good faith, reasonable estimate of the average
price concessions based on the rebates, discounts, chargebacks, fees,
and other price concessions received over a time period prior to the
current reporting period and of equal duration to the current reporting
period, as determined under Sec. 54.9815-2715A3(b)(1)(iii)(D)(3).
(xii) In-network provider means any provider of any item or service
with which a group health plan or health insurance issuer, or a third
party for the plan or issuer, has a contract setting forth the terms
and conditions on which a relevant item or service is provided to a
participant or beneficiary.
(xiii) Items or services means all encounters, procedures, medical
tests, supplies, prescription drugs, durable medical equipment, and
fees (including facility fees), provided or assessed in connection with
the provision of health care.
(xiv) Machine-readable file means a digital representation of data
or information in a file that can be imported or read by a computer
system for further processing without human intervention, while
ensuring no semantic meaning is lost.
(xv) National Drug Code means the unique 10- or 11-digit 3-segment
number assigned by the Food and Drug Administration, which provides a
universal product identifier for drugs in the United States.
[[Page 72296]]
(xvi) Negotiated rate means the amount a group health plan or
health insurance issuer has contractually agreed to pay an in-network
provider, including an in-network pharmacy or other prescription drug
dispenser, for covered items and services, whether directly or
indirectly, including through a third-party administrator or pharmacy
benefit manager.
(xvii) Out-of-network allowed amount means the maximum amount a
group health plan or health insurance issuer will pay for a covered
item or service furnished by an out-of-network provider.
(xviii) Out-of-network provider means a provider of any item or
service that does not have a contract under a participant's or
beneficiary's group health plan or health insurance coverage to provide
items or services.
(xix) Out-of-pocket limit means the maximum amount that a
participant or beneficiary is required to pay during a coverage period
for his or her share of the costs of covered items and services under
his or her group health plan or health insurance coverage, including
for self-only and other than self-only coverage, as applicable.
(xx) Plain language means written and presented in a manner
calculated to be understood by the average participant or beneficiary.
(xxi) Prerequisite means concurrent review, prior authorization,
and step-therapy or fail-first protocols related to covered items and
services that must be satisfied before a group health plan or health
insurance issuer will cover the item or service. The term prerequisite
does not include medical necessity determinations generally or other
forms of medical management techniques.
(xxii) Underlying fee schedule rate means the rate for a covered
item or service from a particular in-network provider, or providers
that a group health plan or health insurance issuer uses to determine a
participant's or beneficiary's cost-sharing liability for the item or
service, when that rate is different from the negotiated rate or
derived amount.
(b) [Reserved]
Sec. 54.9815-2715A2 Transparency in coverage--required disclosures to
participants and beneficiaries.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 54.9815-2715A1 apply.
(b) Required disclosures to participants and beneficiaries. At the
request of a participant or beneficiary who is enrolled in a group
health plan, the plan must provide to the participant or beneficiary
the information required under paragraph (b)(1) of this section, in
accordance with the method and format requirements set forth in
paragraph (b)(2) of this section.
(1) Required cost-sharing information. The information required
under this paragraph (b)(1) is the following cost-sharing information,
which is accurate at the time the request is made, with respect to a
participant's or beneficiary's cost-sharing liability for covered items
and services:
(i) An estimate of the participant's or beneficiary's cost-sharing
liability for a requested covered item or service furnished by a
provider or providers that is calculated based on the information
described in paragraphs (b)(1)(ii) through (iv) of this section.
(A) If the request for cost-sharing information relates to items
and services that are provided within a bundled payment arrangement,
and the bundled payment arrangement includes items or services that
have a separate cost-sharing liability, the group health plan or health
insurance issuer must provide estimates of the cost-sharing liability
for the requested covered item or service, as well as an estimate of
the cost-sharing liability for each of the items and services in the
bundled payment arrangement that have separate cost-sharing
liabilities. While group health plans and health insurance issuers are
not required to provide estimates of cost-sharing liability for a
bundled payment arrangement where the cost-sharing is imposed
separately for each item and service included in the bundled payment
arrangement, nothing prohibits plans or issuers from providing
estimates for multiple items and services in situations where such
estimates could be relevant to participants or beneficiaries, as long
as the plan or issuer also discloses information about the relevant
items or services individually, as required in paragraph (b)(1)(v) of
this section.
(B) For requested items and services that are recommended
preventive services under section 2713 of the Public Health Service Act
(PHS Act), if the group health plan or health insurance issuer cannot
determine whether the request is for preventive or non-preventive
purposes, the plan or issuer must display the cost-sharing liability
that applies for non-preventive purposes. As an alternative, a group
health plan or health insurance issuer may allow a participant or
beneficiary to request cost-sharing information for the specific
preventive or non-preventive item or service by including terms such as
``preventive'', ``non-preventive'' or ``diagnostic'' as a means to
request the most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the following elements, as
applicable to the group health plan's or health insurance issuer's
payment model:
(A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or
service; this rate must be disclosed even if it is not the rate the
plan or issuer uses to calculate cost-sharing liability; and
(B) Underlying fee schedule rate, reflected as a dollar amount, for
the requested covered item or service, to the extent that it is
different from the negotiated rate.
(iv) Out-of-network allowed amount or any other rate that provides
a more accurate estimate of an amount a group health plan or health
insurance issuer will pay for the requested covered item or service,
reflected as a dollar amount, if the request for cost-sharing
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a
plan or issuer reimburses an out-of-network provider a percentage of
the billed charge for a covered item or service, the out-of-network
allowed amount will be that percentage.
(v) If a participant or beneficiary requests information for an
item or service subject to a bundled payment arrangement, a list of the
items and services included in the bundled payment arrangement for
which cost-sharing information is being disclosed.
(vi) If applicable, notification that coverage of a specific item
or service is subject to a prerequisite.
(vii) A notice that includes the following information in plain
language:
(A) A statement that out-of-network providers may bill participants
or beneficiaries for the difference between a provider's billed charges
and the sum of the amount collected from the group health plan or
health insurance issuer and from the participant or beneficiary in the
form of a copayment or coinsurance amount (the difference referred to
as balance billing), and that the cost-sharing information provided
pursuant to this paragraph (b)(1) does not account for these potential
[[Page 72297]]
additional amounts. This statement is only required if balance billing
is permitted under state law;
(B) A statement that the actual charges for a participant's or
beneficiary's covered item or service may be different from an estimate
of cost-sharing liability provided pursuant to paragraph (b)(1)(i) of
this section, depending on the actual items or services the participant
or beneficiary receives at the point of care;
(C) A statement that the estimate of cost-sharing liability for a
covered item or service is not a guarantee that benefits will be
provided for that item or service;
(D) A statement disclosing whether the plan counts copayment
assistance and other third-party payments in the calculation of the
participant's or beneficiary's deductible and out-of-pocket maximum;
(E) For items and services that are recommended preventive services
under section 2713 of the PHS Act, a statement that an in-network item
or service may not be subject to cost-sharing if it is billed as a
preventive service if the group health plan or health insurance issuer
cannot determine whether the request is for a preventive or non-
preventive item or service; and
(F) Any additional information, including other disclaimers, that
the group health plan or health insurance issuer determines is
appropriate, provided the additional information does not conflict with
the information required to be provided by this paragraph (b)(1).
(2) Required methods and formats for disclosing information to
participants and beneficiaries. The methods and formats for the
disclosure required under this paragraph (b) are as follows:
(i) Internet-based self-service tool. Information provided under
this paragraph (b) must be made available in plain language, without
subscription or other fee, through a self-service tool on an internet
website that provides real-time responses based on cost-sharing
information that is accurate at the time of the request. Group health
plans and health insurance issuers must ensure that the self-service
tool allows users to:
(A) Search for cost-sharing information for a covered item or
service provided by a specific in-network provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code 87804) or a descriptive term
(such as ``rapid flu test''), at the option of the user;
(2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
(3) Other factors utilized by the plan or issuer that are relevant
for determining the applicable cost-sharing information (such as
location of service, facility name, or dosage).
(B) Search for an out-of-network allowed amount, percentage of
billed charges, or other rate that provides a reasonably accurate
estimate of the amount a group health plan or health insurance issuer
will pay for a covered item or service provided by out-of-network
providers by inputting:
(1) A billing code or descriptive term, at the option of the user;
and
(2) Other factors utilized by the plan or issuer that are relevant
for determining the applicable out-of-network allowed amount or other
rate (such as the location in which the covered item or service will be
sought or provided).
(C) Refine and reorder search results based on geographic proximity
of in-network providers, and the amount of the participant's or
beneficiary's estimated cost-sharing liability for the covered item or
service, to the extent the search for cost-sharing information for
covered items or services returns multiple results.
(ii) Paper method. Information provided under this paragraph (b)
must be made available in plain language, without a fee, in paper form
at the request of the participant or beneficiary. In responding to such
a request, the group health plan or health insurance issuer may limit
the number of providers with respect to which cost-sharing information
for covered items and services is provided to no fewer than 20
providers per request. The group health plan or health insurance issuer
is required to:
(A) Disclose the applicable provider-per-request limit to the
participant or beneficiary;
(B) Provide the cost-sharing information in paper form pursuant to
the individual's request, in accordance with the requirements in
paragraphs (b)(2)(i)(A) through (C) of this section; and
(C) Mail the cost-sharing information in paper form no later than 2
business days after an individual's request is received.
(D) To the extent participants or beneficiaries request disclosure
other than by paper (for example, by phone or email), plans and issuers
may provide the disclosure through another means, provided the
participant or beneficiary agrees that disclosure through such means is
sufficient to satisfy the request and the request is fulfilled at least
as rapidly as required for the paper method.
(3) Special rule to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information required by this paragraph (b) in compliance with this
section pursuant to a written agreement. Accordingly, if a health
insurance issuer and a plan sponsor enter into a written agreement
under which the issuer agrees to provide the information required under
this paragraph (b) in compliance with this section, and the issuer
fails to do so, then the issuer, but not the plan, violates the
transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a pharmacy benefit manager or other third-party) provides the
information required by this paragraph (b) in compliance with this
section. Notwithstanding the preceding sentence, if a group health plan
or health insurance issuer chooses to enter into such an agreement and
the party with which it contracts fails to provide the information in
compliance with this paragraph (b), the plan or issuer violates the
transparency disclosure requirements of this paragraph (b).
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2023 with respect to the
500 items and services to be posted on a publicly available website,
and with respect to all covered items and services, for plan years
beginning on or after January 1, 2024.
(2) As provided under Sec. 54.9815-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]54.9815-2711(d)(6) or short-
term, limited-duration insurance as defined in Sec. 54.9801-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized
[[Page 72298]]
representatives to access participant or beneficiary information held
by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
Sec. 54.9815-2715A3 Transparency in coverage--requirements for public
disclosure.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 54.9815-2715A1 apply.
(b) Requirements for public disclosure of in-network provider rates
for covered items and services, out-of-network allowed amounts and
billed charges for covered items and services, and negotiated rates and
historical net prices for covered prescription drugs. A group health
plan or health insurance issuer must make available on an internet
website the information required under paragraph (b)(1) of this section
in three machine-readable files, in accordance with the method and
format requirements described in paragraph (b)(2) of this section, and
that are updated as required under paragraph (b)(3) of this section.
(1) Required information. Machine-readable files required under
this paragraph (b) that are made available to the public by a group
health plan or health insurance issuer must include:
(i) An in-network rate machine-readable file that includes the
required information under this paragraph (b)(1)(i) for all covered
items and services, except for prescription drugs that are subject to a
fee-for-service reimbursement arrangement, which must be reported in
the prescription drug machine-readable file pursuant to paragraph
(b)(1)(iii) of this section. The in-network rate machine-readable file
must include:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit Health Insurance
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier
is not available, the 5-digit HIOS identifier, or if no HIOS identifier
is available, the Employer Identification Number (EIN);
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) All applicable rates, which may include one or more of the
following: negotiated rates, underlying fee schedule rates, or derived
amounts. If a group health plan or health insurance issuer does not use
negotiated rates for provider reimbursement, then the plan or issuer
should disclose derived amounts to the extent these amounts are already
calculated in the normal course of business. If the group health plan
or health insurance issuer uses underlying fee schedule rates for
calculating cost sharing, then the plan or issuer should include the
underlying fee schedule rates in addition to the negotiated rate or
derived amount. Applicable rates, including for both individual items
and services and items and services in a bundled payment arrangement,
must be:
(1) Reflected as dollar amounts, with respect to each covered item
or service that is furnished by an in-network provider. If the
negotiated rate is subject to change based upon participant or
beneficiary-specific characteristics, these dollar amounts should be
reflected as the base negotiated rate applicable to the item or service
prior to adjustments for participant or beneficiary-specific
characteristics;
(2) Associated with the National Provider Identifier (NPI), Tax
Identification Number (TIN), and Place of Service Code for each in-
network provider;
(3) Associated with the last date of the contract term or
expiration date for each provider-specific applicable rate that applies
to each covered item or service; and
(4) Indicated with a notation where a reimbursement arrangement
other than a standard fee-for-service model (such as capitation or a
bundled payment arrangement) applies.
(ii) An out-of-network allowed amount machine-readable file,
including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) Unique out-of-network allowed amounts and billed charges with
respect to covered items or services, furnished by out-of-network
providers during the 90-day time period that begins 180 days prior to
the publication date of the machine-readable file (except that a group
health plan or health insurance issuer must omit such data in relation
to a particular item or service and provider when compliance with this
paragraph (b)(1)(ii)(C) would require the plan or issuer to report
payment of out-of-network allowed amounts in connection with fewer than
20 different claims for payments under a single plan or coverage).
Consistent with paragraph (c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the disclosure of information that
would violate any applicable health information privacy law. Each
unique out-of-network allowed amount must be:
(1) Reflected as a dollar amount, with respect to each covered item
or service that is furnished by an out-of-network provider; and
(2) Associated with the NPI, TIN, and Place of Service Code for
each out-of-network provider.
(iii) A prescription drug machine-readable file, including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-
[[Page 72299]]
digit HIOS identifier, or, if no HIOS identifier is available, the EIN;
(B) The NDC and the proprietary and nonproprietary name assigned to
the NDC by the Food and Drug Administration (FDA) for each covered item
or service that is a prescription drug under each coverage option
offered by a plan or issuer;
(C) The negotiated rates which must be:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the last date of the contract term for each
provider-specific negotiated rate that applies to each NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the 90-day time period that begins 180 days
prior to the publication date of the machine-readable file for each
provider-specific historical net price that applies to each NDC (except
that a group health plan or health insurance issuer must omit such data
in relation to a particular NDC and provider when compliance with this
paragraph (b)(1)(iii)(D) would require the plan or issuer to report
payment of historical net prices calculated using fewer than 20
different claims for payment). Consistent with paragraph (c)(3) of this
section, nothing in this paragraph (b)(1)(iii)(D) requires the
disclosure of information that would violate any applicable health
information privacy law.
(2) Required method and format for disclosing information to the
public. The machine-readable files described in this paragraph (b) must
be available in a form and manner as specified in guidance issued by
the Department of the Treasury, the Department of Labor, and the
Department of Health and Human Services. The machine-readable files
must be publicly available and accessible to any person free of charge
and without conditions, such as establishment of a user account,
password, or other credentials, or submission of personally
identifiable information to access the file.
(3) Timing. A group health plan or health insurance issuer must
update the machine-readable files and information required by this
paragraph (b) monthly. The group health plan or health insurance issuer
must clearly indicate the date that the files were most recently
updated.
(4) Special rules to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information pursuant to a written agreement. Accordingly, if a health
insurance issuer and a group health plan sponsor enter into a written
agreement under which the issuer agrees to provide the information
required under this paragraph (b) in compliance with this section, and
the issuer fails to do so, then the issuer, but not the plan, violates
the transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a third-party administrator or health care claims clearinghouse) will
provide the information required by this paragraph (b) in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with this paragraph (b), the plan or issuer
violates the transparency disclosure requirements of this paragraph
(b).
(iii) Aggregation permitted for out-of-network allowed amounts.
Nothing in this section prohibits a group health plan or health
insurance issuer from satisfying the disclosure requirement described
in paragraph (b)(1)(ii) of this section by disclosing out-of-network
allowed amounts made available by, or otherwise obtained from, an
issuer, a service provider, or other party with which the plan or
issuer has entered into a written agreement to provide the information,
provided the minimum claim threshold described in paragraph
(b)(1)(ii)(C) of this section is independently met for each item or
service and for each plan or coverage included in an aggregated Allowed
Amount File. Under such circumstances, health insurance issuers,
service providers, or other parties with which the group health plan or
issuer has contracted may aggregate out-of-network allowed amounts for
more than one plan or insurance policy or contract. Additionally,
nothing in this section prevents the Allowed Amount File from being
hosted on a third-party website or prevents a plan administrator or
issuer from contracting with a third party to post the file. However,
if a plan or issuer chooses not to also host the file separately on its
own website, it must provide a link on its own public website to the
location where the file is made publicly available.
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2022.
(2) As provided under Sec. 54.9815-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]54.9815-2711(d)(6) or short
term limited duration insurance as defined in Sec. 54.9801-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
or beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that
[[Page 72300]]
the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
DEPARTMENT OF LABOR
For the reasons set forth in this preamble, the Department of Labor
amends 29 CFR part 2590 as set forth below:
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
3. The authority citation for part 2590 continues to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c;
sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L.
105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L.
110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-
148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029;
Division M, Pub. L. 113-235, 128 Stat. 2130; Secretary of Labor's
Order 1-2011, 77 FR 1088 (Jan. 9, 2012).
0
4. Sections 2590.715-2715A1, 2590.715-2715A2, and 2590.715-2715A3 are
added to read as follows:
Sec. 2590.715-2715A1 Transparency in coverage--definitions.
(a) Scope and definitions--(1) Scope. This section sets forth
definitions for the price transparency requirements for group health
plans and health insurance issuers offering group health insurance
coverage established in this section and Sec. Sec. 2590.715-2715A2 and
2590.715-2715A3.
(2) Definitions. For purposes of this section and Sec. Sec.
2590.715-2715A2 and 2590.715-2715A3, the following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial responsibility a participant or
beneficiary has incurred at the time a request for cost-sharing
information is made, with respect to a deductible or out-of-pocket
limit. If an individual is enrolled in other than self-only coverage,
these accumulated amounts shall include the financial responsibility a
participant or beneficiary has incurred toward meeting his or her
individual deductible or out-of-pocket limit, as well as the amount of
financial responsibility that all the individuals enrolled under the
plan or coverage have incurred, in aggregate, toward meeting the other
than self-only deductible or out-of-pocket limit, as applicable.
Accumulated amounts include any expense that counts toward a deductible
or out-of-pocket limit (such as a copayment or coinsurance), but
exclude any expense that does not count toward a deductible or out-of-
pocket limit (such as any premium payment, out-of-pocket expense for
out-of-network services, or amount for items or services not covered
under the group health plan or health insurance coverage); and
(B) To the extent a group health plan or health insurance issuer
imposes a cumulative treatment limitation on a particular covered item
or service (such as a limit on the number of items, days, units,
visits, or hours covered in a defined time period) independent of
individual medical necessity determinations, the amount that has
accrued toward the limit on the item or service (such as the number of
items, days, units, visits, or hours the participant or beneficiary,
has used within that time period).
(ii) Billed charge means the total charges for an item or service
billed to a group health plan or health insurance issuer by a provider.
(iii) Billing code means the code used by a group health plan or
health insurance issuer or provider to identify health care items or
services for purposes of billing, adjudicating, and paying claims for a
covered item or service, including the Current Procedural Terminology
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code,
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other
common payer identifier.
(iv) Bundled payment arrangement means a payment model under which
a provider is paid a single payment for all covered items and services
provided to a participant or beneficiary for a specific treatment or
procedure.
(v) Copayment assistance means the financial assistance a
participant or beneficiary receives from a prescription drug or medical
supply manufacturer towards the purchase of a covered item or service.
(vi) Cost-sharing liability means the amount a participant or
beneficiary is responsible for paying for a covered item or service
under the terms of the group health plan or health insurance coverage.
Cost-sharing liability generally includes deductibles, coinsurance, and
copayments, but does not include premiums, balance billing amounts by
out-of-network providers, or the cost of items or services that are not
covered under a group health plan or health insurance coverage.
(vii) Cost-sharing information means information related to any
expenditure required by or on behalf of a participant or beneficiary
with respect to health care benefits that are relevant to a
determination of the participant's or beneficiary's cost-sharing
liability for a particular covered item or service.
(viii) Covered items or services means those items or services,
including prescription drugs, the costs for which are payable, in whole
or in part, under the terms of a group health plan or health insurance
coverage.
(ix) Derived amount means the price that a group health plan or
health insurance issuer assigns to an item or service for the purpose
of internal accounting, reconciliation with providers, or submitting
data in accordance with the requirements of 45 CFR 153.710(c).
(x) Historical net price means the retrospective average amount a
group health plan or health insurance issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. The allocation
shall be determined by dollar value for non-product specific and
product-specific rebates, discounts, chargebacks, fees, and other price
concessions to the extent that the total amount of any such price
concession is known to the group health plan or health insurance issuer
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec. 2590.715-2715A3. However, to the
extent that the total amount of any non-product specific and product-
specific rebates, discounts, chargebacks, fees, or other price
concessions is not known to the group health plan or health insurance
issuer at the time of file publication, then the plan or issuer shall
allocate such rebates, discounts, chargebacks, fees, and other price
concessions by using a good faith, reasonable estimate of the average
price concessions based on the rebates, discounts, chargebacks, fees,
and other price concessions received over a time period prior to the
current reporting period and of equal duration to the current reporting
period, as determined under Sec. 2590.715-2715A3(b)(1)(iii)(D)(3).
(xi) In-network provider means any provider of any item or service
with which a group health plan or health insurance issuer, or a third
party for the plan or issuer, has a contract setting forth the terms
and conditions on which
[[Page 72301]]
a relevant item or service is provided to a participant or beneficiary.
(xii) Items or services means all encounters, procedures, medical
tests, supplies, prescription drugs, durable medical equipment, and
fees (including facility fees), provided or assessed in connection with
the provision of health care.
(xiii) Machine-readable file means a digital representation of data
or information in a file that can be imported or read by a computer
system for further processing without human intervention, while
ensuring no semantic meaning is lost.
(xiv) National Drug Code means the unique 10- or 11-digit 3-segment
number assigned by the Food and Drug Administration, which provides a
universal product identifier for drugs in the United States.
(xv) Negotiated rate means the amount a group health plan or health
insurance issuer has contractually agreed to pay an in-network
provider, including an in-network pharmacy or other prescription drug
dispenser, for covered items and services, whether directly or
indirectly, including through a third-party administrator or pharmacy
benefit manager.
(xvi) Out-of-network allowed amount means the maximum amount a
group health plan or health insurance issuer will pay for a covered
item or service furnished by an out-of-network provider.
(xvii) Out-of-network provider means a provider of any item or
service that does not have a contract under a participant's or
beneficiary's group health plan or health insurance coverage to provide
items or services.
(xviii) Out-of-pocket limit means the maximum amount that a
participant or beneficiary is required to pay during a coverage period
for his or her share of the costs of covered items and services under
his or her group health plan or health insurance coverage, including
for self-only and other than self-only coverage, as applicable.
(xix) Plain language means written and presented in a manner
calculated to be understood by the average participant or beneficiary.
(xx) Prerequisite means concurrent review, prior authorization, and
step-therapy or fail-first protocols related to covered items and
services that must be satisfied before a group health plan or health
insurance issuer will cover the item or service. The term prerequisite
does not include medical necessity determinations generally or other
forms of medical management techniques.
(xxi) Underlying fee schedule rate means the rate for a covered
item or service from a particular in-network provider, or providers
that a group health plan or health insurance issuer uses to determine a
participant's or beneficiary's cost-sharing liability for the item or
service, when that rate is different from the negotiated rate or
derived amount.
(b) [Reserved]
Sec. 2590.715-2715A2 Transparency in coverage--required disclosures
to participants and beneficiaries.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 2590.715-2715A1 apply.
(b) Required disclosures to participants and beneficiaries. At the
request of a participant or beneficiary who is enrolled in a group
health plan, the plan must provide to the participant or beneficiary
the information required under paragraph (b)(1) of this section, in
accordance with the method and format requirements set forth in
paragraph (b)(2) of this section.
(1) Required cost-sharing information. The information required
under this paragraph (b)(1) is the following cost-sharing information,
which is accurate at the time the request is made, with respect to a
participant's or beneficiary's cost-sharing liability for covered items
and services:
(i) An estimate of the participant's or beneficiary's cost-sharing
liability for a requested covered item or service furnished by a
provider or providers that is calculated based on the information
described in paragraphs (b)(1)(ii) through (iv) of this section.
(A) If the request for cost-sharing information relates to items
and services that are provided within a bundled payment arrangement,
and the bundled payment arrangement includes items or services that
have a separate cost-sharing liability, the group health plan or health
insurance issuer must provide estimates of the cost-sharing liability
for the requested covered item or service, as well as an estimate of
the cost-sharing liability for each of the items and services in the
bundled payment arrangement that have separate cost-sharing
liabilities. While group health plans and health insurance issuers are
not required to provide estimates of cost-sharing liability for a
bundled payment arrangement where the cost-sharing is imposed
separately for each item and service included in the bundled payment
arrangement, nothing prohibits plans or issuers from providing
estimates for multiple items and services in situations where such
estimates could be relevant to participants or beneficiaries, as long
as the plan or issuer also discloses information about the relevant
items or services individually, as required in paragraph (b)(1)(v) of
this section.
(B) For requested items and services that are recommended
preventive services under section 2713 of the Public Health Service Act
(PHS Act), if the group health plan or health insurance issuer cannot
determine whether the request is for preventive or non-preventive
purposes, the plan or issuer must display the cost-sharing liability
that applies for non-preventive purposes. As an alternative, a group
health plan or health insurance issuer may allow a participant or
beneficiary to request cost-sharing information for the specific
preventive or non-preventive item or service by including terms such as
``preventive'', ``non-preventive'' or ``diagnostic'' as a means to
request the most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the following elements, as
applicable to the group health plan's or health insurance issuer's
payment model:
(A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or
service; this rate must be disclosed even if it is not the rate the
plan or issuer uses to calculate cost-sharing liability; and
(B) Underlying fee schedule rate, reflected as a dollar amount, for
the requested covered item or service, to the extent that it is
different from the negotiated rate.
(iv) Out-of-network allowed amount or any other rate that provides
a more accurate estimate of an amount a group health plan or health
insurance issuer will pay for the requested covered item or service,
reflected as a dollar amount, if the request for cost-sharing
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a
plan or issuer reimburses an out-of-network provider a percentage of
the billed charge for a covered item or service, the out-of-network
allowed amount will be that percentage.
(v) If a participant or beneficiary requests information for an
item or service subject to a bundled payment arrangement, a list of the
items and
[[Page 72302]]
services included in the bundled payment arrangement for which cost-
sharing information is being disclosed.
(vi) If applicable, notification that coverage of a specific item
or service is subject to a prerequisite.
(vii) A notice that includes the following information in plain
language:
(A) A statement that out-of-network providers may bill participants
or beneficiaries for the difference between a provider's billed charges
and the sum of the amount collected from the group health plan or
health insurance issuer and from the participant or beneficiary in the
form of a copayment or coinsurance amount (the difference referred to
as balance billing), and that the cost-sharing information provided
pursuant to this paragraph (b)(1) does not account for these potential
additional amounts. This statement is only required if balance billing
is permitted under state law;
(B) A statement that the actual charges for a participant's or
beneficiary's covered item or service may be different from an estimate
of cost-sharing liability provided pursuant to paragraph (b)(1)(i) of
this section, depending on the actual items or services the participant
or beneficiary receives at the point of care;
(C) A statement that the estimate of cost-sharing liability for a
covered item or service is not a guarantee that benefits will be
provided for that item or service;
(D) A statement disclosing whether the plan counts copayment
assistance and other third-party payments in the calculation of the
participant's or beneficiary's deductible and out-of-pocket maximum;
(E) For items and services that are recommended preventive services
under section 2713 of the PHS Act, a statement that an in-network item
or service may not be subject to cost-sharing if it is billed as a
preventive service if the group health plan or health insurance issuer
cannot determine whether the request is for a preventive or non-
preventive item or service; and
(F) Any additional information, including other disclaimers, that
the group health plan or health insurance issuer determines is
appropriate, provided the additional information does not conflict with
the information required to be provided by this paragraph (b)(1).
(2) Required methods and formats for disclosing information to
participants and beneficiaries. The methods and formats for the
disclosure required under this paragraph (b) are as follows:
(i) Internet-based self-service tool. Information provided under
this paragraph (b) must be made available in plain language, without
subscription or other fee, through a self-service tool on an internet
website that provides real-time responses based on cost-sharing
information that is accurate at the time of the request. Group health
plans and health insurance issuers must ensure that the self-service
tool allows users to:
(A) Search for cost-sharing information for a covered item or
service provided by a specific in-network provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code 87804) or a descriptive term
(such as ``rapid flu test''), at the option of the user;
(2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
(3) Other factors utilized by the plan or issuer that are relevant
for determining the applicable cost-sharing information (such as
location of service, facility name, or dosage).
(B) Search for an out-of-network allowed amount, percentage of
billed charges, or other rate that provides a reasonably accurate
estimate of the amount a group health plan or health insurance issuer
will pay for a covered item or service provided by out-of-network
providers by inputting:
(1) A billing code or descriptive term, at the option of the user;
and
(2) Other factors utilized by the plan or issuer that are relevant
for determining the applicable out-of-network allowed amount or other
rate (such as the location in which the covered item or service will be
sought or provided).
(C) Refine and reorder search results based on geographic proximity
of in-network providers, and the amount of the participant's or
beneficiary's estimated cost-sharing liability for the covered item or
service, to the extent the search for cost-sharing information for
covered items or services returns multiple results.
(ii) Paper method. Information provided under this paragraph (b)
must be made available in plain language, without a fee, in paper form
at the request of the participant or beneficiary. In responding to such
a request, the group health plan or health insurance issuer may limit
the number of providers with respect to which cost-sharing information
for covered items and services is provided to no fewer than 20
providers per request. The group health plan or health insurance issuer
is required to:
(A) Disclose the applicable provider-per-request limit to the
participant or beneficiary;
(B) Provide the cost-sharing information in paper form pursuant to
the individual's request, in accordance with the requirements in
paragraphs (b)(2)(i)(A) through (C) of this section; and
(C) Mail the cost-sharing information in paper form no later than 2
business days after an individual's request is received.
(D) To the extent participants or beneficiaries request disclosure
other than by paper (for example, by phone or email), plans and issuers
may provide the disclosure through another means, provided the
participant or beneficiary agrees that disclosure through such means is
sufficient to satisfy the request and the request is fulfilled at least
as rapidly as required for the paper method.
(3) Special rule to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information required by this paragraph (b) in compliance with this
section pursuant to a written agreement. Accordingly, if a health
insurance issuer and a plan sponsor enter into a written agreement
under which the issuer agrees to provide the information required under
this paragraph (b) in compliance with this section, and the issuer
fails to do so, then the issuer, but not the plan, violates the
transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a pharmacy benefit manager or other third-party) provides the
information required by this paragraph (b) in compliance with this
section. Notwithstanding the preceding sentence, if a group health plan
or health insurance issuer chooses to enter into such an agreement and
the party with which it contracts fails to provide the information in
compliance with this paragraph (b), the plan or issuer violates the
transparency disclosure requirements of this paragraph (b).
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2023 with respect to the
500 items and services to be posted on a publicly available website,
and with respect to all covered items and services, for plan
[[Page 72303]]
years beginning on or after January 1, 2024.
(2) As provided under Sec. 2590.715-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]2590.715-2711(d)(6) or short
term limited duration insurance as defined in Sec. 2590.701-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant or
beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
Sec. 2590.715-2715A3 Transparency in coverage--requirements for
public disclosure.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 2590.715-2715A1 apply.
(b) Requirements for public disclosure of in-network provider rates
for covered items and services, out-of-network allowed amounts and
billed charges for covered items and services, and negotiated rates and
historical net prices for covered prescription drugs. A group health
plan or health insurance issuer must make available on an internet
website the information required under paragraph (b)(1) of this section
in three machine-readable files, in accordance with the method and
format requirements described in paragraph (b)(2) of this section, and
that are updated as required under paragraph (b)(3) of this section.
(1) Required information. Machine-readable files required under
this paragraph (b) that are made available to the public by a group
health plan or health insurance issuer must include:
(i) An in-network rate machine-readable file that includes the
required information under this paragraph (b)(1)(i) for all covered
items and services, except for prescription drugs that are subject to a
fee-for-service reimbursement arrangement, which must be reported in
the prescription drug machine-readable file pursuant to paragraph
(b)(1)(iii) of this section. The in-network rate machine-readable file
must include:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit Health Insurance
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier
is not available, the 5-digit HIOS identifier, or if no HIOS identifier
is available, the Employer Identification Number (EIN);
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) All applicable rates, which may include one or more of the
following: Negotiated rates, underlying fee schedule rates, or derived
amounts. If a group health plan or health insurance issuer does not use
negotiated rates for provider reimbursement, then the plan or issuer
should disclose derived amounts to the extent these amounts are already
calculated in the normal course of business. If the group health plan
or health insurance issuer uses underlying fee schedule rates for
calculating cost sharing, then the plan or issuer should include the
underlying fee schedule rates in addition to the negotiated rate or
derived amount. Applicable rates, including for both individual items
and services and items and services in a bundled payment arrangement,
must be:
(1) Reflected as dollar amounts, with respect to each covered item
or service that is furnished by an in-network provider. If the
negotiated rate is subject to change based upon participant or
beneficiary-specific characteristics, these dollar amounts should be
reflected as the base negotiated rate applicable to the item or service
prior to adjustments for participant or beneficiary-specific
characteristics;
(2) Associated with the National Provider Identifier (NPI), Tax
Identification Number (TIN), and Place of Service Code for each in-
network provider;
(3) Associated with the last date of the contract term or
expiration date for each provider-specific applicable rate that applies
to each covered item or service; and
(4) Indicated with a notation where a reimbursement arrangement
other than a standard fee-for-service model (such as capitation or a
bundled payment arrangement) applies.
(ii) An out-of-network allowed amount machine-readable file,
including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) Unique out-of-network allowed amounts and billed charges with
respect to covered items or services furnished by out-of-network
providers during the 90-day time period that begins 180 days prior to
the publication date of the machine-readable file (except that a group
health plan or health insurance issuer must omit such data in relation
to a particular item or service and provider when compliance with this
paragraph (b)(1)(ii)(C) would require the plan or issuer to report
payment of out-of-network allowed amounts in connection with fewer than
20 different claims for payments under a single plan or coverage).
Consistent with paragraph
[[Page 72304]]
(c)(3) of this section, nothing in this paragraph (b)(1)(ii)(C)
requires the disclosure of information that would violate any
applicable health information privacy law. Each unique out-of-network
allowed amount must be:
(1) Reflected as a dollar amount, with respect to each covered item
or service that is furnished by an out-of-network provider; and
(2) Associated with the NPI, TIN, and Place of Service Code for
each out-of-network provider.
(iii) A prescription drug machine-readable file, including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) The NDC, and the proprietary and nonproprietary name assigned
to the NDC by the Food and Drug Administration (FDA), for each covered
item or service under each coverage option offered by a plan or issuer
that is a prescription drug;
(C) The negotiated rates which must be:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the last date of the contract term for each
provider-specific negotiated rate that applies to each NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the 90-day time period that begins 180 days
prior to the publication date of the machine-readable file for each
provider-specific historical net price that applies to each NDC (except
that a group health plan or health insurance issuer must omit such data
in relation to a particular NDC and provider when compliance with this
paragraph (b)(1)(iii)(D) would require the plan or issuer to report
payment of historical net prices calculated using fewer than 20
different claims for payment). Consistent with paragraph (c)(3) of this
section, nothing in this paragraph (b)(1)(iii)(D) requires the
disclosure of information that would violate any applicable health
information privacy law.
(2) Required method and format for disclosing information to the
public. The machine-readable files described in this paragraph (b) must
be available in a form and manner as specified in guidance issued by
the Department of the Treasury, the Department of Labor, and the
Department of Health and Human Services. The machine-readable files
must be publicly available and accessible to any person free of charge
and without conditions, such as establishment of a user account,
password, or other credentials, or submission of personally
identifiable information to access the file.
(3) Timing. A group health plan or health insurance issuer must
update the machine-readable files and information required by this
paragraph (b) monthly. The group health plan or health insurance issuer
must clearly indicate the date that the files were most recently
updated.
(4) Special rules to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information pursuant to a written agreement. Accordingly, if a health
insurance issuer and a group health plan sponsor enter into a written
agreement under which the issuer agrees to provide the information
required under this paragraph (b) in compliance with this section, and
the issuer fails to do so, then the issuer, but not the plan, violates
the transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a third-party administrator or health care claims clearinghouse) will
provide the information required by this paragraph (b) in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with this paragraph (b), the plan or issuer
violates the transparency disclosure requirements of this paragraph
(b).
(iii) Aggregation permitted for out-of-network allowed amounts.
Nothing in this section prohibits a group health plan or health
insurance issuer from satisfying the disclosure requirement described
in paragraph (b)(1)(ii) of this section by disclosing out-of-network
allowed amounts made available by, or otherwise obtained from, an
issuer, a service provider, or other party with which the plan or
issuer has entered into a written agreement to provide the information,
provided the minimum claim threshold described in paragraph
(b)(1)(ii)(C) of this section is independently met for each item or
service and for each plan or coverage included in an aggregated Allowed
Amount File. Under such circumstances, health insurance issuers,
service providers, or other parties with which the group health plan or
issuer has contracted may aggregate out-of-network allowed amounts for
more than one plan or insurance policy or contract. Additionally,
nothing in this section prevents the Allowed Amount File from being
hosted on a third-party website or prevents a plan administrator or
issuer from contracting with a third party to post the file. However,
if a plan or issuer chooses not to also host the file separately on its
own website, it must provide a link on its own public website to the
location where the file is made publicly available.
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2022.
(2) As provided under Sec. 2590.715-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]2590.715-2711(d)(6) or short
term limited duration insurance as defined in Sec. 2590.701-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
or beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph
[[Page 72305]]
(b) of this section, provided that the plan or issuer corrects the
information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
For the reasons set forth in this preamble, the Department of
Health and Human Services amends 45 CFR parts 147 and 158 as set forth
below:
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
5. The authority citation for part 147 continues to read as follows:
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92, as amended.
0
6. Sections 147.210, 147.211 and 147.212 are added to read as follows:
Sec. 147.210 Transparency in coverage--definitions.
(a) Scope and definitions--(1) Scope. This section sets forth
definitions for the price transparency requirements for group health
plans and health insurance issuers in the individual and group markets
established in this section and Sec. Sec. 147.211 and 147.212.
(2) Definitions. For purposes of this section and Sec. Sec.
147.211 and 147.212, the following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial responsibility a participant,
beneficiary, or enrollee has incurred at the time a request for cost-
sharing information is made, with respect to a deductible or out-of-
pocket limit. If an individual is enrolled in other than self-only
coverage, these accumulated amounts shall include the financial
responsibility a participant, beneficiary, or enrollee has incurred
toward meeting his or her individual deductible or out-of-pocket limit,
as well as the amount of financial responsibility that all the
individuals enrolled under the plan or coverage have incurred, in
aggregate, toward meeting the other than self-only deductible or out-
of-pocket limit, as applicable. Accumulated amounts include any expense
that counts toward a deductible or out-of-pocket limit (such as a
copayment or coinsurance), but exclude any expense that does not count
toward a deductible or out-of-pocket limit (such as any premium
payment, out-of-pocket expense for out-of-network services, or amount
for items or services not covered under the group health plan or health
insurance coverage); and
(B) To the extent a group health plan or health insurance issuer
imposes a cumulative treatment limitation on a particular covered item
or service (such as a limit on the number of items, days, units,
visits, or hours covered in a defined time period) independent of
individual medical necessity determinations, the amount that has
accrued toward the limit on the item or service (such as the number of
items, days, units, visits, or hours the participant, beneficiary, or
enrollee has used within that time period).
(ii) Billed charge means the total charges for an item or service
billed to a group health plan or health insurance issuer by a provider.
(iii) Billing code means the code used by a group health plan or
health insurance issuer or provider to identify health care items or
services for purposes of billing, adjudicating, and paying claims for a
covered item or service, including the Current Procedural Terminology
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code,
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other
common payer identifier.
(iv) Bundled payment arrangement means a payment model under which
a provider is paid a single payment for all covered items and services
provided to a participant, beneficiary, or enrollee for a specific
treatment or procedure.
(v) Copayment assistance means the financial assistance a
participant, beneficiary, or enrollee receives from a prescription drug
or medical supply manufacturer towards the purchase of a covered item
or service.
(vi) Cost-sharing liability means the amount a participant,
beneficiary, or enrollee is responsible for paying for a covered item
or service under the terms of the group health plan or health insurance
coverage. Cost-sharing liability generally includes deductibles,
coinsurance, and copayments, but does not include premiums, balance
billing amounts by out-of-network providers, or the cost of items or
services that are not covered under a group health plan or health
insurance coverage.
(vii) Cost-sharing information means information related to any
expenditure required by or on behalf of a participant, beneficiary, or
enrollee with respect to health care benefits that are relevant to a
determination of the participant's, beneficiary's, or enrollee's cost-
sharing liability for a particular covered item or service.
(viii) Covered items or services means those items or services,
including prescription drugs, the costs for which are payable, in whole
or in part, under the terms of a group health plan or health insurance
coverage.
(ix) Derived amount means the price that a group health plan or
health insurance issuer assigns to an item or service for the purpose
of internal accounting, reconciliation with providers or submitting
data in accordance with the requirements of Sec. 153.710(c) of this
subchapter.
(x) Enrollee means an individual who is covered under an individual
health insurance policy as defined under section 2791(b)(5) of the
Public Health Service (PHS) Act.
(xi) Historical net price means the retrospective average amount a
group health plan or health insurance issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. The allocation
shall be determined by dollar value for non-product specific and
product-specific rebates, discounts, chargebacks, fees, and other price
concessions to the extent that the total amount of any such price
concession is known to the group health plan or health insurance issuer
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec. 147.212. However, to the extent
that the total amount of any non-product specific and product-specific
rebates, discounts, chargebacks, fees, or other price concessions is
not known to the group health plan or health insurance issuer at the
time of file publication, then the plan or issuer shall allocate such
rebates, discounts, chargebacks, fees, and other price
[[Page 72306]]
concessions by using a good faith, reasonable estimate of the average
price concessions based on the rebates, discounts, chargebacks, fees,
and other price concessions received over a time period prior to the
current reporting period and of equal duration to the current reporting
period, as determined under Sec. 147.212(b)(1)(iii)(D)(3).
(xii) In-network provider means any provider of any item or service
with which a group health plan or health insurance issuer, or a third
party for the plan or issuer, has a contract setting forth the terms
and conditions on which a relevant item or service is provided to a
participant, beneficiary, or enrollee.
(xiii) Items or services means all encounters, procedures, medical
tests, supplies, prescription drugs, durable medical equipment, and
fees (including facility fees), provided or assessed in connection with
the provision of health care.
(xiv) Machine-readable file means a digital representation of data
or information in a file that can be imported or read by a computer
system for further processing without human intervention, while
ensuring no semantic meaning is lost.
(xv) National Drug Code means the unique 10- or 11-digit 3-segment
number assigned by the Food and Drug Administration, which provides a
universal product identifier for drugs in the United States.
(xvi) Negotiated rate means the amount a group health plan or
health insurance issuer has contractually agreed to pay an in-network
provider, including an in-network pharmacy or other prescription drug
dispenser, for covered items and services, whether directly or
indirectly, including through a third-party administrator or pharmacy
benefit manager.
(xvii) Out-of-network allowed amount means the maximum amount a
group health plan or health insurance issuer will pay for a covered
item or service furnished by an out-of-network provider.
(xviii) Out-of-network provider means a provider of any item or
service that does not have a contract under a participant's,
beneficiary's, or enrollee's group health plan or health insurance
coverage to provide items or services.
(xix) Out-of-pocket limit means the maximum amount that a
participant, beneficiary, or enrollee is required to pay during a
coverage period for his or her share of the costs of covered items and
services under his or her group health plan or health insurance
coverage, including for self-only and other than self-only coverage, as
applicable.
(xx) Plain language means written and presented in a manner
calculated to be understood by the average participant, beneficiary, or
enrollee.
(xxi) Prerequisite means concurrent review, prior authorization,
and step-therapy or fail-first protocols related to covered items and
services that must be satisfied before a group health plan or health
insurance issuer will cover the item or service. The term prerequisite
does not include medical necessity determinations generally or other
forms of medical management techniques.
(xxii) Underlying fee schedule rate means the rate for a covered
item or service from a particular in-network provider, or providers
that a group health plan or health insurance issuer uses to determine a
participant's, beneficiary's, or enrollee's cost-sharing liability for
the item or service, when that rate is different from the negotiated
rate or derived amount.
(b) [Reserved]
Sec. 147.211 Transparency in coverage--required disclosures to
participants, beneficiaries, or enrollees.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers in the individual and group markets for the timely
disclosure of information about costs related to covered items and
services under a plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 147.210 apply.
(b) Required disclosures to participants, beneficiaries, or
enrollees. At the request of a participant, beneficiary, or enrollee
who is enrolled in a group health plan or health insurance issuer
offering group or individual health insurance coverage, the plan or
issuer must provide to the participant, beneficiary, or enrollee the
information required under paragraph (b)(1) of this section, in
accordance with the method and format requirements set forth in
paragraph (b)(2) of this section.
(1) Required cost-sharing information. The information required
under this paragraph (b)(1) is the following cost-sharing information,
which is accurate at the time the request is made, with respect to a
participant's, beneficiary's, or enrollee's cost-sharing liability for
covered items and services:
(i) An estimate of the participant's, beneficiary's, or enrollee's
cost-sharing liability for a requested covered item or service
furnished by a provider or providers, which must reflect any cost-
sharing reductions the enrollee would receive, that is calculated based
on the information described in paragraphs (b)(1)(ii) through (iv) of
this section.
(A) If the request for cost-sharing information relates to items
and services that are provided within a bundled payment arrangement,
and the bundled payment arrangement includes items or services that
have a separate cost-sharing liability, the group health plan or health
insurance issuer must provide estimates of the cost-sharing liability
for the requested covered item or service, as well as an estimate of
the cost-sharing liability for each of the items and services in the
bundled payment arrangement that have separate cost-sharing
liabilities. While group health plans and health insurance issuers are
not required to provide estimates of cost-sharing liability for a
bundled payment arrangement where the cost-sharing is imposed
separately for each item and service included in the bundled payment
arrangement, nothing prohibits plans or issuers from providing
estimates for multiple items and services in situations where such
estimates could be relevant to participants or beneficiaries, as long
as the plan or issuer also discloses information about the relevant
items or services individually, as required in paragraph (b)(1)(v) of
this section.
(B) For requested items and services that are recommended
preventive services under section 2713 of the Public Health Service Act
(PHS Act), if the group health plan or health insurance issuer cannot
determine whether the request is for preventive or non-preventive
purposes, the plan or issuer must display the cost-sharing liability
that applies for non-preventive purposes. As an alternative, a group
health plan or health insurance issuer may allow a participant,
beneficiary, or enrollee to request cost-sharing information for the
specific preventive or non-preventive item or service by including
terms such as ``preventive'', ``non-preventive'' or ``diagnostic'' as a
means to request the most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the following elements, as
applicable to the group health plan's or health insurance issuer's
payment model:
(A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or
service; this rate must be disclosed even if it is not the rate the
plan or issuer uses to calculate cost-sharing liability; and
(B) Underlying fee schedule rate, reflected as a dollar amount, for
the requested covered item or service, to the
[[Page 72307]]
extent that it is different from the negotiated rate.
(iv) Out-of-network allowed amount or any other rate that provides
a more accurate estimate of an amount a group health plan or health
insurance issuer will pay for the requested covered item or service,
reflected as a dollar amount, if the request for cost-sharing
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a
plan or issuer reimburses an out-of-network provider a percentage of
the billed charge for a covered item or service, the out-of-network
allowed amount will be that percentage.
(v) If a participant, beneficiary, or enrollee requests information
for an item or service subject to a bundled payment arrangement, a list
of the items and services included in the bundled payment arrangement
for which cost-sharing information is being disclosed.
(vi) If applicable, notification that coverage of a specific item
or service is subject to a prerequisite.
(vii) A notice that includes the following information in plain
language:
(A) A statement that out-of-network providers may bill
participants, beneficiaries, or enrollees for the difference between a
provider's billed charges and the sum of the amount collected from the
group health plan or health insurance issuer and from the participant,
beneficiary, or enrollee in the form of a copayment or coinsurance
amount (the difference referred to as balance billing), and that the
cost-sharing information provided pursuant to this paragraph (b)(1)
does not account for these potential additional amounts. This statement
is only required if balance billing is permitted under state law;
(B) A statement that the actual charges for a participant's,
beneficiary's, or enrollee's covered item or service may be different
from an estimate of cost-sharing liability provided pursuant to
paragraph (b)(1)(i) of this section, depending on the actual items or
services the participant, beneficiary, or enrollee receives at the
point of care;
(C) A statement that the estimate of cost-sharing liability for a
covered item or service is not a guarantee that benefits will be
provided for that item or service;
(D) A statement disclosing whether the plan counts copayment
assistance and other third-party payments in the calculation of the
participant's, beneficiary's, or enrollee's deductible and out-of-
pocket maximum;
(E) For items and services that are recommended preventive services
under section 2713 of the PHS Act, a statement that an in-network item
or service may not be subject to cost-sharing if it is billed as a
preventive service if the group health plan or health insurance issuer
cannot determine whether the request is for a preventive or non-
preventive item or service; and
(F) Any additional information, including other disclaimers, that
the group health plan or health insurance issuer determines is
appropriate, provided the additional information does not conflict with
the information required to be provided by this paragraph (b)(1).
(2) Required methods and formats for disclosing information to
participants, beneficiaries, or enrollees. The methods and formats for
the disclosure required under this paragraph (b) are as follows:
(i) Internet-based self-service tool. Information provided under
this paragraph (b) must be made available in plain language, without
subscription or other fee, through a self-service tool on an internet
website that provides real-time responses based on cost-sharing
information that is accurate at the time of the request. Group health
plans and health insurance issuers must ensure that the self-service
tool allows users to:
(A) Search for cost-sharing information for a covered item or
service provided by a specific in-network provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code 87804) or a descriptive term
(such as ``rapid flu test''), at the option of the user;
(2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
(3) Other factors utilized by the plan or issuer that are relevant
for determining the applicable cost-sharing information (such as
location of service, facility name, or dosage).
(B) Search for an out-of-network allowed amount, percentage of
billed charges, or other rate that provides a reasonably accurate
estimate of the amount a group health plan or health insurance issuer
will pay for a covered item or service provided by out-of-network
providers by inputting:
(1) A billing code or descriptive term, at the option of the user;
and
(2) Other factors utilized by the plan or issuer that are relevant
for determining the applicable out-of-network allowed amount or other
rate (such as the location in which the covered item or service will be
sought or provided).
(C) Refine and reorder search results based on geographic proximity
of in-network providers, and the amount of the participant's,
beneficiary's, or enrollee's estimated cost-sharing liability for the
covered item or service, to the extent the search for cost-sharing
information for covered items or services returns multiple results.
(ii) Paper method. Information provided under this paragraph (b)
must be made available in plain language, without a fee, in paper form
at the request of the participant, beneficiary, or enrollee. In
responding to such a request, the group health plan or health insurance
issuer may limit the number of providers with respect to which cost-
sharing information for covered items and services is provided to no
fewer than 20 providers per request. The group health plan or health
insurance issuer is required to:
(A) Disclose the applicable provider-per-request limit to the
participant, beneficiary, or enrollee;
(B) Provide the cost-sharing information in paper form pursuant to
the individual's request, in accordance with the requirements in
paragraphs (b)(2)(i)(A) through (C) of this section; and
(C) Mail the cost-sharing information in paper form no later than 2
business days after an individual's request is received.
(D) To the extent participants, beneficiaries, and enrollees
request disclosure other than by paper (for example, by phone or
email), plans and issuers may provide the disclosure through another
means, provided the participant, beneficiary, or enrollee agrees that
disclosure through such means is sufficient to satisfy the request and
the request is fulfilled at least as rapidly as required for the paper
method.
(3) Special rule to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information required by this paragraph (b) in compliance with this
section pursuant to a written agreement. Accordingly, if a health
insurance issuer and a plan sponsor enter into a written agreement
under which the issuer agrees to provide the information required under
this paragraph (b) in compliance with this section, and the issuer
fails to do so, then the issuer, but not the plan, violates the
transparency disclosure requirements of this paragraph (b).
[[Page 72308]]
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a pharmacy benefit manager or other third-party) provides the
information required by this paragraph (b) in compliance with this
section. Notwithstanding the preceding sentence, if a group health plan
or health insurance issuer chooses to enter into such an agreement and
the party with which it contracts fails to provide the information in
compliance with this paragraph (b), the plan or issuer violates the
transparency disclosure requirements of this paragraph (b).
(c) Applicability. (1) The provisions of this section apply for
plan years (in the individual market, for policy years) beginning on or
after January 1, 2023 with respect to the 500 items and services to be
posted on a publicly available website, and with respect to all covered
items and services, for plan years (in the individual market, for
policy years) beginning on or after January 1, 2024.
(2) As provided under Sec. 147.140, this section does not apply to
grandfathered health plans. This section also does not apply to health
reimbursement arrangements or other account-based group health plans as
defined in Sec. 147.126(d)(6) or short term limited duration insurance
as defined in 45 CFR 144.103.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
beneficiary, or enrollee information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
Sec. 147.212 Transparency in coverage--requirements for public
disclosure.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers in the individual and group markets for the timely
disclosure of information about costs related to covered items and
services under a plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 147.210 apply.
(b) Requirements for public disclosure of in-network provider rates
for covered items and services, out-of-network allowed amounts and
billed charges for covered items and services, and negotiated rates and
historical net prices for covered prescription drugs. A group health
plan or health insurance issuer must make available on an internet
website the information required under paragraph (b)(1) of this section
in three machine-readable files, in accordance with the method and
format requirements described in paragraph (b)(2) of this section, and
that are updated as required under paragraph (b)(3) of this section.
(1) Required information. Machine-readable files required under
this paragraph (b) that are made available to the public by a group
health plan or health insurance issuer must include:
(i) An in-network rate machine-readable file that includes the
required information under this paragraph (b)(1)(i) for all covered
items and services, except for prescription drugs that are subject to a
fee-for-service reimbursement arrangement, which must be reported in
the prescription drug machine-readable file pursuant to paragraph
(b)(1)(iii) of this section. The in-network rate machine-readable file
must include:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit Health Insurance
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier
is not available, the 5-digit HIOS identifier, or if no HIOS identifier
is available, the Employer Identification Number (EIN);
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) All applicable rates, which may include one or more of the
following: Negotiated rates, underlying fee schedule rates, or derived
amounts. If a group health plan or health insurance issuer does not use
negotiated rates for provider reimbursement, then the plan or issuer
should disclose derived amounts to the extent these amounts are already
calculated in the normal course of business. If the group health plan
or health insurance issuer uses underlying fee schedule rates for
calculating cost sharing, then the plan or issuer should include the
underlying fee schedule rates in addition to the negotiated rate or
derived amount. Applicable rates, including for both individual items
and services and items and services in a bundled payment arrangement,
must be:
(1) Reflected as dollar amounts, with respect to each covered item
or service that is furnished by an in-network provider. If the
negotiated rate is subject to change based upon participant,
beneficiary, or enrollee-specific characteristics, these dollar amounts
should be reflected as the base negotiated rate applicable to the item
or service prior to adjustments for participant, beneficiary, or
enrollee-specific characteristics;
(2) Associated with the National Provider Identifier (NPI), Tax
Identification Number (TIN), and Place of Service Code for each in-
network provider;
(3) Associated with the last date of the contract term or
expiration date for each provider-specific applicable rate that applies
to each covered item or service; and
(4) Indicated with a notation where a reimbursement arrangement
other than a standard fee-for-service model (such as capitation or a
bundled payment arrangement) applies.
(ii) An out-of-network allowed amount machine-readable file,
including:
(A) For each coverage option offered by a group health plan or
health
[[Page 72309]]
insurance issuer, the name and the 14-digit HIOS identifier, or, if the
14-digit HIOS identifier is not available, the 5-digit HIOS identifier,
or, if no HIOS identifier is available, the EIN;
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) Unique out-of-network allowed amounts and billed charges with
respect to covered items or services furnished by out-of-network
providers during the 90-day time period that begins 180 days prior to
the publication date of the machine-readable file (except that a group
health plan or health insurance issuer must omit such data in relation
to a particular item or service and provider when compliance with this
paragraph (b)(1)(ii)(C) would require the plan or issuer to report
payment of out-of-network allowed amounts in connection with fewer than
20 different claims for payments under a single plan or coverage).
Consistent with paragraph (c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the disclosure of information that
would violate any applicable health information privacy law. Each
unique out-of-network allowed amount must be:
(1) Reflected as a dollar amount, with respect to each covered item
or service that is furnished by an out-of-network provider; and
(2) Associated with the NPI, TIN, and Place of Service Code for
each out-of-network provider.
(iii) A prescription drug machine-readable file, including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) The NDC, and the proprietary and nonproprietary name assigned
to the NDC by the Food and Drug Administration (FDA), for each covered
item or service that is a prescription drug under each coverage option
offered by a plan or issuer;
(C) The negotiated rates which must be:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the last date of the contract term for each
provider-specific negotiated rate that applies to each NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the 90-day time period that begins 180 days
prior to the publication date of the machine-readable file for each
provider-specific historical net price that applies to each NDC (except
that a group health plan or health insurance issuer must omit such data
in relation to a particular NDC and provider when compliance with this
paragraph (b)(1)(iii)(D) would require the plan or issuer to report
payment of historical net prices calculated using fewer than 20
different claims for payment). Consistent with paragraph (b)(3) of this
section, nothing in this paragraph (b)(1)(iii)(D) requires the
disclosure of information that would violate any applicable health
information privacy law.
(2) Required method and format for disclosing information to the
public. The machine-readable files described in this paragraph (b) must
be available in a form and manner as specified in guidance issued by
the Department of the Treasury, the Department of Labor, and the
Department of Health and Human Services. The machine-readable files
must be publicly available and accessible to any person free of charge
and without conditions, such as establishment of a user account,
password, or other credentials, or submission of personally
identifiable information to access the file.
(3) Timing. A group health plan or health insurance issuer must
update the machine-readable files and information required by this
paragraph (b) monthly. The group health plan or health insurance issuer
must clearly indicate the date that the files were most recently
updated.
(4) Special rules to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information pursuant to a written agreement. Accordingly, if a health
insurance issuer and a group health plan sponsor enter into a written
agreement under which the issuer agrees to provide the information
required under this paragraph (b) in compliance with this section, and
the issuer fails to do so, then the issuer, but not the plan, violates
the transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a third-party administrator or health care claims clearinghouse) will
provide the information required by this paragraph (b) in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with this paragraph (b), the plan or issuer
violates the transparency disclosure requirements of this paragraph
(b).
(iii) Aggregation permitted for out-of-network allowed amounts.
Nothing in this section prohibits a group health plan or health
insurance issuer from satisfying the disclosure requirement described
in paragraph (b)(1)(ii) of this section by disclosing out-of-network
allowed amounts made available by, or otherwise obtained from, an
issuer, a service provider, or other party with which the plan or
issuer has entered into a written agreement to provide the information,
provided the minimum claim threshold described in paragraph
(b)(1)(ii)(C) of this section is independently met for each item or
service and for each plan or coverage included in an aggregated Allowed
Amount File. Under such circumstances, health insurance issuers,
service providers, or other parties with which the group health plan or
issuer has contracted may aggregate out-of-network allowed amounts for
more than one plan or insurance policy or contract. Additionally,
nothing in this section prevents the Allowed Amount File from being
hosted on a third-party website or prevents a plan administrator or
issuer from contracting with a third party to post the file. However,
if a plan or issuer chooses not to also host the file separately on its
own website, it must provide a link on its own public website to the
location where the file is made publicly available.
(c) Applicability. (1) The provisions of this section apply for
plan years (in the
[[Page 72310]]
individual market, for policy years) beginning on or after January 1,
2022.
(2) As provided under Sec. 147.140, this section does not apply to
grandfathered health plans. This section also does not apply to health
reimbursement arrangements or other account-based group health plans as
defined in Sec. 147.126(d)(6) or short term limited duration insurance
as defined in Sec. 144.103 of this subchapter.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
or beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
7. The authority citation for part 158 continues to read as follows:
Authority: 42 U.S.C. 300gg-18.
0
8. Section 158.221 is amended by adding paragraph (b)(9) to read as
follows:
Sec. 158.221 Formula for calculating an issuer's medical loss ratio.
* * * * *
(b) * * *
(9) Beginning with the 2020 MLR reporting year, an issuer may
include in the numerator of the MLR any shared savings payments the
issuer has made to an enrollee as a result of the enrollee choosing to
obtain health care from a lower-cost, higher-value provider.
* * * * *
[FR Doc. 2020-24591 Filed 11-3-20; 4:15 pm]
BILLING CODE 4830-01-P; 4510-29-P; 4120-01-P